Towards the end of last week the Federal Government announced that changes would be made to the general anti avoidance tax provisions under part IVA.
The announcement was made in the context of the government’s view that the provisions needed to ‘be effective in counteracting tax avoidance schemes that are carried out as part of broader commercial transactions’.
In particular the proposed amendments are said to be designed to ‘confirm that part IVA always intended to apply to commercial arrangements which have been implemented in a particular way to avoid tax. This also includes steps within broader commercial arrangements’.
The changes are said to be required because ‘in recent cases, some taxpayers have argued successfully that they did not get a 'tax benefit' because, without the scheme, they would not have entered into an arrangement that attracted tax. For example, they could have entered into another scheme that also avoided tax, deferred their arrangements indefinitely or done nothing at all. Such an outcome can potentially undermine the overall effectiveness of Part IVA and so the Government will act to ensure such arguments will no longer be successful.’
The government has said that to ensure that the changes do not interfere with what are otherwise genuine commercial activities it will consult extensively as to how to best implement the new rules.
Specialist advice is also likely to be sought before preparing the first draft of the new legislation and throughout the redrafting process.
A full copy of the media release is at the following link:
http://www.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2012/010.htm&pageID=003&min=mva&Year=&DocType=
Until next week.
