Update On Promoter Penalty Legislation

On 15 March 2007, the Australian Tax Office (ATO) released two draft practice statements on the administration of the promoter penalty laws. The draft practice statements deal with both limbs of the promoter penalty laws, being:

• conduct resulting in an entity being a ‘promoter’ of a ‘tax exploitation scheme’, and

• conduct resulting in a scheme, which has been promoted on the basis of conformity with a product ruling, being implemented in a way that is materially different from that described in the product ruling.

Key points arising from the practice statement which concerns the first limb are:

• Tax officers who identify the potential application of the promoter penalty laws must refer the matter to the ATO’s Promoter Compliance Team, which will review referrals to identify whether the laws potentially have application.