Company director sues Brentnalls WA

An infrastructure company director is taking accounting firm Brentnalls WA Chartered Accountants and its founder Tony Monisse to court, alleging a loss of $6.6 million in tax rebate.

Fremantle Constructions founder John Schulz last week lodged a writ in the Supreme Court of Western Australia naming BMS (WA) trading as Brentnalls WA, Mr Monisse and former Brentnalls WA senior manager Alana Barnes as defendants.

Mr Schulz is the sole director of Fremantle Constructions, JJ Century Investments, and Sico Pty Ltd, an investment entity for the John Schulz Family Trust.

In the writ obtained by Business News, Mr Schulz is claiming damages and compensation from Brentnalls WA, Mr Monisse and Ms Barnes, alleging he and his companies suffered loss from breaches of their obligations to provide him advice with due care, skill and diligence at law.

In 2014, Fremantle Constructions and Mr Schulz accepted two fee proposals for a quarterly business review and month-end accounting provided by Brentnalls, according to the writ.

The defendants allegedly advised a restructuring of the Fremantle Constructions group of entities and the parties entered into an agreement later that year, the writ said.

The writ said the restructure included a transfer of 100,000 Fremantle Constructions shares from Mr Schulz to JJ Century Investments, and a transfer of the same shares to the John Schulz Family Trust the next month.

According to the writ, Fremantle Constructions paid dividends of more than $15 million with franking credits of about $6.6 million from the profits.

In early 2016, the writ said Mr Schulz was advised to sign a 2015 tax return for JJ Century Investments to claim the $6.6 million franking credits on the dividends.

However, the Australian Tax Office did not allow JJ Century to claim the franking credits because it held the Fremantle Constructions shares for fewer than 45 days, according to the writ.

Mr Schulz claimed in the writ that the defendants failed to advise him of the 45-day rule and failed to ensure any dividends paid were as tax effective as possible.

He claimed JJ Century Investments had paid $4.6 million in tax on the restructure dividends and was liable to pay a penalty tax.

“The increased tax liability consequences were caused by the negligence and breach of the duty of care owed by each of the defendants to each of the plaintiffs,” the writ said.

Mr Schulz claimed in the writ that he and his companies relied on the defendants’ conduct, which he alleged to be misleading and deceptive.

Business News has contacted Brentnalls WA for comment.