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ARTICLE · 26 FEBRUARY 2013

Part IVA anti-avoidance amendments lead to greater uncertainty

Cooper Grace Ward
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These 2013 amendments give the Commissioner wide powers to reconstruct what actually happened to cancel any tax benefit.

AustraliaTax
Greg Cahill
Greg Cahill
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Recent amendments to the 1936 Tax Act mean the ATO now has more ammunition to fight anti-avoidance cases. Treasury estimates that the changes will prevent the loss of $1 billion in tax revenue each year.

The changes were prompted by the Commissioner losing a string of high profile cases, explained in our previous legal alert Anti-avoidance rule changes on the horizon. When Part IVA was first introduced, it was never intended to compel taxpayers to pay the greatest amount of tax possible. It was designed to counter artificial or contrived arrangements.

However, the amendments in the Tax Laws Amendment (Countering Tax Avoidance and Multi National Profit Shifting) Bill 2013 give the ATO wide powers to reconstruct what actually happened to cancel any tax benefit. For small to medium enterprises and individuals, the risk is that sensible tax planning may now be caught in the anti-avoidance provisions.

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