On Friday 16 November, the Assistant Treasurer released the
much-anticipated draft of legislation to amend Part IVA. These
changes follow a number of defeats for the ATO which, the ATO said,
demonstrated fundamental flaws in the existing design. Assuming
they are enacted in their proposed form, the amendments will change
several features of Part IVA but it remains to be seen whether the
Courts will agree that they have the effects the government seeks.
This Tax Brief examines what the new provisions change and how they
are meant to work.
1 Background
The operative provision of Part IVA permits the Commissioner of
Taxation to undertake various remedial actions, 'where a tax
benefit has been obtained ... by a taxpayer in connection with a
scheme to which this Part applies ... ' Typically, the most
contentious part of any dispute involving Part IVA is the argument
about whether a scheme was implemented with the sole or dominant
purpose of avoiding tax, but every
