Taxpayer Alerts

TA 2009/16 - Circumvention of in-house asset rules by self-managed superannuation funds using related party agreements

This Taxpayer Alert describes an arrangement where a self-managed superannuation fund enters into an agreement (sometimes referred to as a joint venture agreement) with a related trust to acquire assets such as rental property.

TA 2009/15 - Payment of inflated insurance premiums to a related party

This Taxpayer Alert describes an arrangement involving payments of amounts described as insurance premiums which are excessive by reference to the coverage provided and feature no significant transfer of insurance risk.

TA 2009/14 - Artificially creating capital losses through default beneficiary arrangement to offset capital gains

This Taxpayer Alert describes arrangements where a taxpayer with a current or future capital gain attempts to artificially create capital losses through default beneficiary arrangement to offset capital gains.

TA 2009/13 - Managed Investment Schemes: Purported partnership participation

This Taxpayer Alert describes an arrangement where a purported partnership is inserted into an investment in an afforestation, agricultural or horticultural Managed Investment Scheme (MIS) in order to generate deductions for the newly inserted partners.

TA 2009/12 - Re-characterising capital losses as revenue losses

This Taxpayer Alert describes an arrangement whereby taxpayers seek to re-characterise their shareholding status from that of a long term capital investor to a trader in shares.

TA 2009/11 - Retail Premiums paid on unexercised share entitlements

This Taxpayer Alert describes arrangements where a company pays shareholders, who have unexercised share entitlements an amount (referred to in this Alert as a 'Retail Premium'), in respect of those unexercised entitlements.

TA 2009/10 - Non-commercial use of negotiable instruments involving self-managed superannuation funds

This Taxpayer Alert describes arrangements involving non-commercial use of negotiable instruments (usually a promissory note) to pay a benefit from or make a contribution to a self-managed superannuation fund (SMSF).

TA 2009/9 - Contrived cross-border arrangements that seek to generate debt deductions for non-assessable non-exempt income

This Taxpayer Alert describes certain cross-border financing arrangements which seek to generate debt deductions in Australia. These arrangements appear to be driven by the tax benefits that arise under section 25-90 of the Income Tax Assessment Act 1997.

TA 2009/8 - Exploitation of 1999 superannuation transitional provisions to obtain taxation and regulatory benefits

This Taxpayer Alert describes an arrangement that involves the transfer of benefits associated with the 1999 'transitional provisions' for self-managed superannuation funds (SMSFs) with pre-existing interests in unit trusts.

TA 2009/7 - Uncommercial contract manufacture arrangements to claim the wine equalisation tax (WET) producer rebate

This TPA describes uncommercial and collusive arrangements where one or more growers use a contract winemaker, so each such grower can attempt to claim the WET producer rebate by retaining title to their produce, until a pre-arranged sale to the winemaker.

TA 2009/6 - Use of uncommercial indirect marketing arrangements to reduce wine equalisation tax (WET)

This TPA describes uncommercial and collusive arrangements that seek to reduce WET liability by using an interposed entity and an agency relationship to shift the point where WET liability is determined and to manipulate which methodology is used.

TA 2009/5 - Use of an associate to obtain Goods and Services Tax ('GST') benefits on construction of residential premises for lease

This Taxpayer Alert describes an arrangement where an entity uses an associate in an attempt to secure input tax credits on the construction of residential premises for lease and defer the corresponding GST liability, in some cases indefinitely.

TA 2009/4 - Land owner's use of a registered associate to maximise input tax credit entitlements and reduce Goods and Services Tax (GST) payable under the margin scheme.

This Taxpayer Alert describes an arrangement that purportedly allows a land owner to register for GST as late as possible to minimise its GST payable, but still claim a full input tax credit on its acquisition of construction services from its associate.

TA 2009/3 - Bringing forward deductions to rehabilitate a mine site

This Taxpayer Alert describes an arrangement where an entity attempts to bring forward an income tax deduction for a future obligation to rehabilitate a mine site.

TA 2009/2 - Certain cross-border Prepaid Forward Purchase Agreements

This Taxpayer Alert describes an arrangement using a Prepaid Forward Purchase Agreement which attempts to reduce the assessable income of an Australian resident taxpayer.

TA 2009/1 - Superannuation Illegal Early Release Arrangements

This Taxpayer Alert describes arrangements incorrectly offering people early release of their preserved superannuation benefits prior to retirement without meeting statutory conditions for such release.

TA 2008/20 - Foreign residents exploiting asset valuations to avoid capital gains tax

This Taxpayer Alert describes certain arrangements where foreign residents seek to avoid capital gains tax from the indirect disposal of Australian real property under Division 855 of the Income Tax Assessment Act 1997.

TA 2008/19 - Foreign residents attempting to avoid Australian capital gains tax by certain "staggered sell down" arrangements

This Taxpayer Alert describes certain 'staggered sell down' arrangements designed to result in disregarded capital gains tax where there is an indirect disposal of Australian real property under Division 855 of the Income Tax Assessment Act 1997.

TA 2008/18 - Arrangements to shift foreign business losses into Australian branches or resident entities

Describes arrangements within multi-national companies operating through branches, or operating through transactions with foreign associates, which seek to shift deductions for losses from foreign operations into their Australian businesses.

TA 2008/17 - Claims for GST refunds beyond four years arising from the reclassification of a previously taxable supply as GST free

This Taxpayer Alert describes a situation where a taxpayer seeks to claim a refund four years or more after the end of a tax period on the basis that they incorrectly classified a supply as a taxable supply and they now contend it is GST free.

TA 2008/16 - Liquidation of entities to avoid the payment of tax liability

This Taxpayer Alert describes arrangements whereby taxpayers involved in a previous tax avoidance scheme enter into an arrangement to avoid the payment of the tax liability arising from that scheme by liquidating entities.

TA 2008/15 - Profit washing scheme using a trust and a loss entity

This Taxpayer Alert describes arrangements where a taxpayer attempts to minimise tax liability by using tax losses in an unrelated entity. This Alert highlights additional features of concern to arrangements similar to those described in TA 2005/1.

TA 2008/14 - Salary Deferral Arrangements

This Taxpayer Alert concerns arrangements where an employee defers salary and wage income. The purpose of the arrangements is to convert salary and wage income to a form that is taxed concessionally or not at all.

TA 2008/13 - Employee Savings Plans

This Taxpayer Alert describes arrangements involving employee benefit trust structures that attempt to convert salary or wages income into a capital gain.

TA 2008/12 - Non-cash contributions to superannuation funds

This Taxpayer Alert is concerned with arrangements that have features which are designed to allow a member of a superannuation fund to circumvent the new superannuation contributions limits that came into effect from 1 July 2007. The arrangements will mainly involve self-managed superannuation funds, but need not be limited to them.

TA 2008/11 - Land Impairment Trust Arrangement

This Taxpayer Alert describes land impairment trust arrangements associated with forestry managed investment schemes. These arrangements involve the sale of land at an impaired value by a member of a group of entities that are treated as a consolidated group for income tax purposes.

TA 2008/10 - Purported prepayment of service fees designed to postpone tax liability

This Taxpayer Alert describes an arrangement for the prepayment of service fees from a trading entity to an associated service entity in which the dominant purpose of the arrangement was to secure a deduction in the year of alleged payment rather than in the year any services were provided.

TA 2008/9 - Private company loan arrangement to obtain tax-free distributions and avoid deemed dividends

This Taxpayer Alert describes an arrangement whereby a shareholder purports to make a repayment of a shareholder loan from a private company via a round robin of endorsed cheques so as to avoid the operation of Division 7A of the Income Tax Assessment Act 1936.

TA 2008/8 - Australian resident entities creating false deductions and/or concealing income through arrangements with promoters based in Vanuatu

This Taxpayer Alert describes arrangements through which Australian resident entities, with the help of a promoter in Vanuatu, seek deductions for artificially created expenses and/or establish structures that enable the concealment of income to attempt to avoid or evade Australian tax.

TA 2008/7 - Application of Part IVA of the Income Tax Assessment Act 1936 to 'wash sale' arrangements

This Taxpayer Alert describes an arrangement called a 'wash sale' where an asset is disposed of, but there is no substantial change in economic interest in the asset. This may occur where the interest in the asset is in some way reinstated by the taxpayer, in order to apply a resulting capital loss or allowable deduction against a capital gain or assessable income already derived or expected to be derived.

TA 2008/6 - Claiming tax deductions for debts from a previous tax planning scheme that are forgiven or where repayments are refunded

This Taxpayer Alert describes arrangements whereby taxpayers involved in a previous tax avoidance scheme enter into an arrangement under which they purport to be able to claim a tax deduction for debts relating to that scheme that have been forgiven or where repayments of the debt are refunded.

TA 2008/5 - Certain borrowings by self managed superannuation funds

This Taxpayer Alert is concerned with arrangements under which the trustee of a self managed superannuation fund enters into certain limited-recourse borrowings, which may not meet the conditions in subsection 67(4A) and/or breach other provisions of the Superannuation Industry (Supervision) Act 1993, as well as related superannuation rules.

TA 2008/4 - Self-managed superannuation funds deriving income from certain uncommercial trusts

This Taxpayer Alert describes a non-arm's length arrangement under which a self-managed superannuation fund (SMSF) derives income through a direct or indirect interest in a closely-held trust. This Alert should be read in conjunction with Taxpayer Alert TA 2008/3.

TA 2008/3 - Uncommercial use of certain trusts

This Taxpayer Alert describes a non-arm's length arrangement under which a taxpayer uses borrowed funds to acquire an interest, such as units, in a certain type of trust, which uses the funds to purchase income-producing property.

TA 2008/2 - Use of certain legal structures established in Liechtenstein to attempt to avoid or evade Australian tax obligations

This Taxpayer Alert describes arrangements that attempt to utilise Liechtenstein legal structures to avoid or evade Australian tax.

TA 2008/1 - Certain stapled securities involving notes and preference shares

This Taxpayer Alert describes those Stapled Security arrangements where a Note stapled to a Preference Share is issued by banks and other public companies.

TA 2007/6 - Scholarship Trusts and Education Funding Programs

This Taxpayer Alert describes an arrangement where a Scholarship Trust is claimed to be established either in Australia or in a foreign country and, in combination with what is described as an 'Education Funding Program', seeks to provide funds to a student which the marketer claims are free of tax.

TA 2007/5 - Arrangements designed to avoid the operation of Division 7A through the use of a Corporate Limited Partnership

This Taxpayer Alert describes arrangements which attempt to circumvent the application of Division 7A of Part III the Income Tax Assessment Act 1936 (ITAA 1936) through the use of what is claimed to be a Corporate Limited Partnership ('CLP').

TA 2007/4 - Share options granted under an employee share scheme to a related trust

This Taxpayer Alert describes an arrangement to avoid tax, through the use of a related trust, by an individual taxpayer in respect of options to acquire shares granted under an employee share scheme.

TA 2007/3 - Income Tax: Foreign tax credit enhanced return bond investment

This Taxpayer Alert describes an arrangement where an Australian resident taxpayer seeks to enhance its return on a bond investment, through access to foreign tax credits for withholding tax claimed to be payable under the arrangement. The desired net effect of the arrangement is that neither the bond issuer group, nor the Australian resident taxpayer, bears the economic cost of the tax withheld.

TA 2007/2 - Employee Entitlement Fund

This alert describes an arrangement where an employee seeks to obtain a deduction for contributions purportedly made to an Employee Entitlement Fund on the basis that the contributions are to meet entitlements that may arise in the future for employees.

TA 2007/1 - Lease by a charitable institution to an associated endorsed charitable institution designed to gain input tax credits.

Describes an arrangement whereby a charitable institution leases its land and buildings to an associated charitable institution so that a supply of residential accommodation qualifies as GST - free.

TA 2005/8 - Asset transfer to an offshore structure at below market value with subsequent use to produce income not attributed to the taxpayer for Australian tax purposes

Describes an arrangement to reduce exposure to Australian tax by providing goods or services to an offshore structure below market value, which then provides the same goods or services to a third party at market value, paying no Australian tax.

TA 2005/7 - Asset transfer to an offshore structure at below market value in anticipation of resale to a third party at market value

Describes an arrangement to reduce exposure to Australian tax where an Australian resident taxpayer transfers an asset to an offshore structure below market value. The offshore structure subsequently sells the asset to a third party at market value.

TA 2005/6 - Use of an inbound offshore re-invoicing arrangement to avoid or evade Australian tax

Describes an arrangement to reduce exposure to Australian tax by using an offshore structure to artificially inflate the price of goods or services. In extreme cases, no actual goods or services may be provided and no third party may actually be involved.

TA 2005/5 - Use of an outbound offshore re-invoicing arrangement to avoid or evade Australian tax

TA 2005/4 - Creation of Goods and Services Tax (GST) input tax credits by barter exchanges

A barter exhange uses unlimited trade dollars to buy and sell goods and services in its own right. By buying at commercially unrealistc prices from its members, and ensuring acquisitions continually exceed supplies, they claim significant GST refunds.

TA 2005/3 - Consolidation - Application of the tax cost setting rules to copyright

This Alert describes an arrangement where the head company of a consolidated group seeks to claim a capital allowance based on an inflated tax cost setting amount, in relation to any copyright in an asset containing knowledge and/or information.

TA 2005/2 - Prepaid Services Warrant Arrangement

This describes an arrangement where for a relatively small cash outlay large losses are created by the taxpayer or their partnership by acquiring prepaid service warrants that may be redeemable for the provision of legal and other professional services.

TA 2005/1 Profit washing scheme using a trust and loss entity

This Alert describes an arrangement where the business of the taxpayer is restructured so that the income of the business passes through a chain of trusts and on to a loss company. The income, less an amount for promoter fees, remains effectively under the control of the taxpayer, or associates.

TA 2004/9 - Exploitation of the second-hand goods provisions to obtain Goods and Services Tax (GST) input tax credits

A GST registered entity acquires goods through a non-taxable supply. The acquiring entity sells the goods to an associated entity, creating a claim for an input tax credit on acquisition of the goods under the second-hand goods provisions.

TA 2004/8 - Use of the Going Concern provisions and the Margin Scheme to avoid or reduce the Goods and Services Tax (GST) on the sale of new residential premises

Describes the sale of substantially completed residential units/houses as a GST-free going concern. The acquiring entity completes the residential units/houses and sells them as a taxable supply to third parties, paying GST only on the margin between this sale price and its acquisition cost.

TA 2004/7 - Use of the Grouping provisions and the Margin Scheme to avoid or reduce the Goods and Services Tax (GST) on the sale of new residential premises

Relying on a concession within the grouping provisions, substantially completed residential units/houses are sold within a group and not treated as a taxable supply. The effect of the intra-group sale is to avoid or reduce the margin for GST on the sale to the third party.

TA 2004/6 - Use of the Grouping provisions of the GST Act to avoid Goods and Services Tax (GST) on the sale of new residential premises

Using a GST group structure to create an 'internal sale' of new home units/houses between GST group members. Then claim that the units/houses are no longer 'new residential premises'. Any subsequent sale of the residential units/houses is claimed to be input taxed and not subject to GST.

A taxpayer disposes of its client records in which copyright may subsist to an entity that is part of the same wholly-owned group. That entity then claims a deduction in relation to copyright under the capital allowance provisions.

TA 2004/4 - New Zealand Foreign Trust

This Taxpayer Alert describes an arrangement where a New Zealand based foreign discretionary trust provides services, at a mark up, to an Australian resident business.

TA 2004/3 - Dividend Stripping / Distribution of Surplus Profits Arrangements

This Taxpayer Alert describes arrangements involving the transfer of retained earnings and/or current year profits of a company to the shareholders or their associates in a non-taxable form.

TA 2004/2 - Avoidance of Goods and Services Tax (GST) on the sale of new residential premises

This Alert describes the use of the joint venture provisions to avoid GST on the sale of new residential premises. The arrangement creates an �Internal sale� and the subsequent sale is claimed to be input taxed and not subject to GST as the units/houses are no longer �new residential premises�.

TA 2004/1 - Non-arm�s length arrangements using Goods and Services Tax (GST) cash / non-cash accounting methods to obtain a GST benefit.

This Alert describes arrangements where a vendor accounting on a cash basis sells at artificial prices to a purchaser who accounts on a non-cash basis. This allows inflated input tax credits to be obtained by the purchaser up-front, whereas GST payable by the vendor is deferred significantly

TA 2003/4 - Assignment of Australian Copyright on Articles Prepared by Non- Resident Authors

This Taxpayer Alert describes an arrangement involving a purported assignment of Australian copyright on articles prepared by non-resident authors. It is argued that the payments made to the non-resident authors are not subject to Royalty Withholding Tax.

TA 2003/3 - Avoidance of Capital Gains Tax Utilising a Trust Structure

This Taxpayer Alert describes an arrangement involving the sale of capital gains tax (CGT) assets. The arrangement seeks to ensure that on the sale of the CGT assets to an arm's length party the taxable capital gains are streamed to a tax preferred entity, such as a charity, whilst the original owners of the assets receive the sale proceeds free of any CGT liability.

TA 2003/2 - Investment into Foreign Life Insurance Policies

This Alert is about borrowing money to invest in a life insurance policy from a tax haven based life insurance company and seeking to earn tax-free income outside Australia on the investment and claiming deductions for interest paid on the borrowings.

TA 2003/1 - Distribution to Superannuation Fund from Interposed Fixed Trust

This Alert describes an arrangement where a taxpayer establishes a fixed trust to distribute business profits to their superannuation fund in order to access the concessional tax rate and avoid the aged based deduction limits and superannuation surcharge.

TA 2002/09 - Remote Area Housing Benefit Arrangements

This alert describes an arrangement where an employer and its employee enter into a lease arrangement on a residential property either owned or leased by the employee in a remote area and the employee gains tax deductions for their private residence.

TA 2002/08 - Mutual associations - deductibility of contributions and derivation of income (volume allowances)

This alert describes an arrangement where a retailer claims a deduction for volume allowances contributed to a mutual association. The association's expenses are less than the contributions, and the surplus is said to be returned to the retailer tax free.

(Withdrawn) TA 2002/07 Living Away from Home Allowance � Interposed Company

This Alert is withdrawn as the risks inherent in the alert have abated.

TA 2002/06 Education or Scholarship Trust Arrangements

This Alert describes arrangements where relatives establish a Trust for the education of a student. The income from the Trust assets is �paid� to the student as a scholarship or like payment, and is claimed to be exempt income instead of assessable income.

TA 2002/05 Prepaid Service Warrant Arrangement

This Alert is about taxpayers claiming significant tax deductions for partnership losses created by the acquisition of prepaid service warrants which are endorsed in favour of a client for a fee and redeemed for financial and wealth creation seminars.

TA 2002/04 - Personal Services - Partnership Arrangement

This Alert is about taxpayers purporting to form a partnership with unrelated taxpayers to recharacterise their individual personal services income as partnership income. Each partner then attempts to split their income with family members.

TA 2002/03 Access to Preserved Superannuation

These arrangements attempt to get around laws designed to encourage superannuation savings. Superannuation is taxed at lower rates to encourage retirement savings. People who obtain unapproved access to their super risk losing this reduced tax rate.

TA 2002/02 � Scrip Loan and Option Arrangement

This Taxpayer Alert describes a potential franking credit trading arrangement where a taxpayer is attempting to obtain franking credits to offset against tax payable.

TA 2002/01 � Internet Marketing Expenses Scheme

This Taxpayer Alert describes an arrangement where a taxpayer claims large income tax deductions for Internet marketing expenses paid to a tax haven based Internet marketer.

TA 2001/01 � Home Loan Unit Trust Arrangement

This Alert describes an arrangement where taxpayers use a unit trust to acquire a property for residential use in order to access tax deductions generally available to investment properties. Simply it is about seeking deductions for private expenditure.