MANAGED Investment scheme investors are being advised not to take up the Australian Taxation Office settlement offer until things are made clearer by Federal Court rulings.
MANAGED Investment scheme investors are being advised not to take up the Australian Taxation Office settlement offer until things are made clearer by Federal Court rulings.
While some tax scheme promoters have said the ATO has been fair, others, including former assistant treasurer with the Keating Government George Gear, are still scathing in their criticism.
Financial planner with the AIM Group and Australian Managed Investments Association chairman Mr Gear believes the ATO should admit its error in handling the whole issue.
“We are calling for the ATO to withdraw the amended assessments and apply the existing laws,” Mr Gear said.
“The ATO have made a mistake in the way they have handled this and I think rather than admit their mistake they have been carrying on,” Mr Gear said.
He said it was wrong to now accuse investors of tax cheats using part 4A of the Tax Act when, over the past 20 years, similar deductions had been allowed.
However, Forest Rewards Ltd, which has been developing Sandalwood, Teak and Brushwood in WA, believes the ATO offer is fair and should clear the air for investors.
“I think it’s good to have a resolution in the market-place and to have cleared the decks. It lets people understand exactly where they are going,” Forest Rewards marketing manager Neville Pollard said.
Under the settlement offer from the ATO, most investors will not be charged penalties or interest and all will be allowed deductions for the actual cash they paid into eligible schemes. The ATO said this typically represented around 25 per cent of the deductions claimed.
The ATO’s decision, which came just days after the Senate Economics References Committee handed down its second report on mass marketed tax effective schemes, is being viewed generally as a back-down on the original hardline approach the ATO took.
Tax Commissioner Michael Carmody said the settlement offer gave investors a chance to resolve their scheme debts without waiting for court decisions, which may not be finalised for years.
Both Mr Pollard and Mr Gear said the timing of the settlement offer, available to investors for two months after the judgment of the test case Budplan scheme case is handed down, makes it appear that the ATO was confident of winning the case.
Mr Gear is advising AMIA’s 11,000 investors and tax scheme promoters members not to take up the offer and instead hold out until a ruling is made by the Federal Court.
“We believe the investors best hope for justice depends on the court cases,” Mr Gear said.
It’s a point shared by Perth lawyer Frank Wilson who, working with a team of half a dozen lawyers, has taken up the fight for investors and by doing so is setting new precedents.
Since the first ATO crack-down two years ago, the law firm has attracted around 10,000 unhappy investors out of the estimated 50,000 Australians caught short by the changing ATO approach.
Wilson & Atkinson is taking eight cases before the Federal Court, with the findings of two already heard likely to be handed down within the next few months.
The court ruling of Puzey vs Taxation commissioner, which relates to the Allrange Forestry Project and Vincent vs Taxation Commissioner relating to the Cattle Breeding Project, are both being watched keenly by investors around Australia.
However, Wilson & Atkinson taxation partner Frank Wilson said while it was unlikely that all of his clients would need to litigate, each case still had its individual facts and circumstances that would need to be considered.
But, like Mr Gear, Mr Wilson believes investors should sit tight and wait to see what the court decides.
“We are writing to our clients this week that they should first await the outcome of the Budplan case and the two other Federal cases before accepting the settlement offer or doing anything,” Mr Wilson said.
But investment scheme promoters for the moment are just hoping for an end to the limbo that their industry has been placed in.
Mr Gear said investment scheme operator Environmental Forestry Farms, of which he is chairman, had faced a dramatic cut in sales.
He said the latest offering had only managed to attract $2 million in investment, compared to around $8 million in a previous offering.
“We want to end it so we can get some confidence back with investors,” Mr Gear said.
While some tax scheme promoters have said the ATO has been fair, others, including former assistant treasurer with the Keating Government George Gear, are still scathing in their criticism.
Financial planner with the AIM Group and Australian Managed Investments Association chairman Mr Gear believes the ATO should admit its error in handling the whole issue.
“We are calling for the ATO to withdraw the amended assessments and apply the existing laws,” Mr Gear said.
“The ATO have made a mistake in the way they have handled this and I think rather than admit their mistake they have been carrying on,” Mr Gear said.
He said it was wrong to now accuse investors of tax cheats using part 4A of the Tax Act when, over the past 20 years, similar deductions had been allowed.
However, Forest Rewards Ltd, which has been developing Sandalwood, Teak and Brushwood in WA, believes the ATO offer is fair and should clear the air for investors.
“I think it’s good to have a resolution in the market-place and to have cleared the decks. It lets people understand exactly where they are going,” Forest Rewards marketing manager Neville Pollard said.
Under the settlement offer from the ATO, most investors will not be charged penalties or interest and all will be allowed deductions for the actual cash they paid into eligible schemes. The ATO said this typically represented around 25 per cent of the deductions claimed.
The ATO’s decision, which came just days after the Senate Economics References Committee handed down its second report on mass marketed tax effective schemes, is being viewed generally as a back-down on the original hardline approach the ATO took.
Tax Commissioner Michael Carmody said the settlement offer gave investors a chance to resolve their scheme debts without waiting for court decisions, which may not be finalised for years.
Both Mr Pollard and Mr Gear said the timing of the settlement offer, available to investors for two months after the judgment of the test case Budplan scheme case is handed down, makes it appear that the ATO was confident of winning the case.
Mr Gear is advising AMIA’s 11,000 investors and tax scheme promoters members not to take up the offer and instead hold out until a ruling is made by the Federal Court.
“We believe the investors best hope for justice depends on the court cases,” Mr Gear said.
It’s a point shared by Perth lawyer Frank Wilson who, working with a team of half a dozen lawyers, has taken up the fight for investors and by doing so is setting new precedents.
Since the first ATO crack-down two years ago, the law firm has attracted around 10,000 unhappy investors out of the estimated 50,000 Australians caught short by the changing ATO approach.
Wilson & Atkinson is taking eight cases before the Federal Court, with the findings of two already heard likely to be handed down within the next few months.
The court ruling of Puzey vs Taxation commissioner, which relates to the Allrange Forestry Project and Vincent vs Taxation Commissioner relating to the Cattle Breeding Project, are both being watched keenly by investors around Australia.
However, Wilson & Atkinson taxation partner Frank Wilson said while it was unlikely that all of his clients would need to litigate, each case still had its individual facts and circumstances that would need to be considered.
But, like Mr Gear, Mr Wilson believes investors should sit tight and wait to see what the court decides.
“We are writing to our clients this week that they should first await the outcome of the Budplan case and the two other Federal cases before accepting the settlement offer or doing anything,” Mr Wilson said.
But investment scheme promoters for the moment are just hoping for an end to the limbo that their industry has been placed in.
Mr Gear said investment scheme operator Environmental Forestry Farms, of which he is chairman, had faced a dramatic cut in sales.
He said the latest offering had only managed to attract $2 million in investment, compared to around $8 million in a previous offering.
“We want to end it so we can get some confidence back with investors,” Mr Gear said.
