Privately owned and wealthy groups – Business and tax adviser to Phil Taylor

Bianca Dempsey

‘My focus is on building wealth for my clients, including Phil. Taking risks is part of their business. I help provide certainty for their plans and arrangements in a cost-effective way.’

My client Phil was looking to commence a new apartment development. I had to sort out the finances and tax implications. I advised Phil of the best business structures to finance the project, manage available cash and protect his assets.

I recommended a privately owned business structure for Phil, which included an operating company and a trust. I wanted to give Phil flexibility in how he used funds from his group, so I developed a range of intra group loans which could be used if needed. My practice software provided alerts reminding me of the potential tax risks associated with loans within private groups and also gave me access to decision making tools to put appropriate loan arrangements in place.

After registering the new arrangements for Phil’s group, my system displayed how the changes would alter the ATO’s view of Phil's business and personal tax affairs and how this would influence the way the ATO engaged with him. Having put complying loans in place, Phil’s ATO risk profile did not change which was good to know.

A few months into the build, Phil needed additional funds to finish the development. I developed a financing plan, but wanted to test my understanding of the complex tax implications with the ATO.

I contacted Samantha, an ATO officer. She suggested that if I was to share some further information about Phil’s arrangements upfront, we could talk through Phil’s tax position to identify and resolve any issues and get certainty before proceeding.

After sharing the information, Samantha agreed with my view on the tax consequences of the financing plan. We also spoke about Phil’s affairs more generally. Samantha advised that Phil would need to report the profits from this development as revenue, rather than a capital gain as he had done for a previous property development. This is something I needed to share with Phil and we decided we wanted to work this through with the ATO.

Since Phil was in Dubai, Samantha scheduled an after hours video conference with us and relevant ATO experts to get the certainty we needed. The ATO explained the situation and answered my questions and we all agreed on the tax treatment for the profits. After the video conference, I received a full record of our conversation complete with an ATO reference number, and this was linked to Phil’s profile.

It was reassuring to get certainty from the ATO. Samantha’s proactive approach ensured we spoke to the right people at the right time and saved me a lot of work and Phil a lot of time and worry.

What the ATO does

• We work with software developers to include risk indicators in practice management and business accounting software.
• Samantha is proactive about drawing on internal and external experts when needed.
• Samantha is an expert in her field and is empowered and supported to make timely decisions.
• Samantha and her team have access to data, analytics and visualisation tools to understand complex structures.
• Our systems record our interactions and arrangements with Bianca and Phil, which influence our future interactions with them.
• We understand business is increasingly global. We are available for discussions and to provide advice where appropriate, during business hours in international time zones.

How the ATO behaves

• We understand and consider our clients' circumstances and offer a fair and differentiated service.
• We willingly share information, insights and experience and proactively raise issues with our clients.
• We are supported to take ownership, exercise judgment and make timely decisions.
• We get things done promptly and with purpose.