It’s clear that you have a deep understanding of the intricacies involved with high-net-worth client management and tax structures. You’re absolutely right that the ATO’s approach to income splitting has become more stringent, and any strategy that seems like an attempt to minimize tax obligations could indeed raise red flags.
The example you provided, where someone moves from being an employee to a consultant with a company/trust structure to split income with a spouse, does look like an arrangement that could attract scrutiny. Tax avoidance strategies that don’t reflect the true nature of the income or the work performed are risky, and the ATO could challenge the structure, especially if the arrangement appears artificial or contrived.
It's also a good reminder for advisors and clients alike to stay on top of changes to tax laws, especially in such a dynamic environment. Clients should be proactive in reviewing their structures, particularly when significant time has passed since they were first set up. Regular reviews ensure compliance and alignment with current tax guidelines.
Lastly, your point on GAAR (General Anti-Avoidance Rule) is crucial. As you mentioned, individual circumstances matter, and whether GAAR applies depends on the specifics of each case. It’s important to have an experienced advisor who is well-versed in these rules to navigate potential pitfalls effectively.
Thanks for sharing this insight!
