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Court tax ruling prompts an investor rethink

THE Australian Tax Office says it has been inundated with investors willing to accept its terms after a second case involving mass marketed schemes was decided in the ATO’s favour.

However, unlike the Budplan decision handed down by the Federal Court in March, the decision reached two weeks ago in the case Vincent v Commissioner of Taxation received little fanfare.

But the decision did not go unnoticed among investors. Many who had been delaying their decision on the ATO’s offer until the court had cleared the uncertainty have walked through the taxman’s door.

At the conclusion of the Vincent case just 14,000 investors had lodged their deeds to take up the offer, whereby investors could claim their actual cash outlays as deductions while most will not have to pay any penalties or interest.

In the two weeks following the decision the number of takers had more than doubled to 33,000 acceptances, representing 60 per cent of scheme investments, with a further rush expected this week before the close of the offer expected on Friday.

The ATO was forced to extend the offer period by three weeks to June 21 because of the last-minute rush by investors.

Tax commissioner Michael Carmody said tax agents were having trouble coping with the extra workload.

He said the deadline would not be extended further and there would be no changes to the terms of the settlement.

“There won’t be a further offer. Reports that investors may be offered a deal which would allow them a deduction for 66 per cent of the loan component of their investment are wrong,” Mr Carmody said.

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