The ATO is focussing on arrangements that may constitute “reimbursement agreements” — which broadly involve making distributions to lower taxed beneficiaries and directing the economic benefits to another entity. In February 2022, the ATO released draft guidance on the application of Section 100A. Our summary of the guidance is available here.
The ATO notes that the other entity is often a controller of a privately owned group, close relatives of the controller or an entity within such a group, and is concerned that some of these arrangements have been entered into in order to avoid tax. The ATO is particularly concerned about arrangements where parents enjoy the economic benefit of trust income appointed to their children who are over 18 years of age and have released a Taxpayer Alert TA 2022/1. Our summary of the guidance is available here.
Section 100A is a draconian provision, not least because the ATO has an unlimited period within which to make an assessment under these provisions.
In addition to our guidance referred to above, for more information, you can view our webinar on Section 100A from 23 September 2020 (presented by Partner Paul Sokolowski and Senior Associate Kaitilin Lowdon) below. While the webinar was made prior to the release of the draft guidance and taxpayer alert released by the ATO, our views expressed in the webinar have not changed.
Want to know more? Listen to our podcast episode on TaxVibe - Unpacking the ATO's section 100A draft guidance