The problem with that accountants analysis of whether Part IVA would apply to the course of action is that their conclusion that paying a nil rate of tax is still paying tax does not align with the requirements of Part IVA in the tax legislation.
Part IVA applies where a scheme is entered into for the sole or dominant purpose of obtaining a tax benefit. The term 'scheme' is very widely defined in the legislation as including any agreement, arrangement, undertaking, plan, proposal, action course of action or course of conduct. The course of action you have proposed definitely falls within the definition of a scheme.
The legislation also specifically states that a reference to a tax benefit in Part IVA includes 'an amount not being included in the assessable income of a taxpayer in a year of income'.
If the scheme results in the net capital gain on the final disposal being less than it would otherwise be then all of the requirements of Part IVA will be met.
However, Part IVA is not a 'self assessing' provision and requires that the Commissioner determine that it applies. Which in itself gives rise to the issue of the ATO even becoming aware of the scheme. Furthermore, the resources required to actually analyse data of buys and sells (the proposed course of action would look like general share trading if the taxpayers net capital gains for each year were not completely reconstructed - including parcel matching) would be significantly disproportionate to any tax clawed back.
If the course of action resulted in a capital loss (on the basis that all the interim buys and sells were disregarded) then I agree that Part IVA would not apply to the proposed course of action due to there not being a 'tax benefit'.
- Forums
- ASX - General
- Capital gains tax
Capital gains tax, page-50
-
-
- There are more pages in this discussion • 8 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Featured News
The Watchlist
HAR
HARANGA RESOURCES LIMITED.
Peter Batten, MD
Peter Batten
MD
Previous Video
Next Video
SPONSORED BY The Market Online