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Discussion in 'Accounting, Tax & Legal' started by julia, 20th Nov, 2008.

  1. julia

    julia Active Member

    3rd Jan, 2007
    Beachmere Qld
    19 November 2008

    Claiming interest deductions in certain uncommercial trust arrangements

    We have released a draft taxation determination which provides the Commissioner's preliminary, though considered, view on interest deductions relating to money borrowed by taxpayers to subscribe for units in certain uncommercial trusts.

    Draft taxation determination (TD) 2008/D16 follows Taxpayer Alerts 2008/3 and 2008/4, issued on 26 March 2008, which outlined our concerns about these arrangements.

    Comments on the draft

    We have had discussions with the members of the National Tax Liaison Group about this issue and we will be seeking their input and comments in relation to this draft TD.

    We also invite your comments which can be forwarded to Simon Haines, as outlined in the draft TD, by 19 December 2008.

    If you would like more information about draft TD 2008/D16 you can phone 1800 177 006 (option 4).

    How are we currently dealing with uncommercial trust arrangements?

    We are currently examining the conduct of entities involved in marketing these uncommercial trust arrangements and in a number of cases we are considering, or are in the process of taking, action against them under the promoter penalty laws which apply from April 2006.

    Tax agents wanting to provide information about people or companies who may be promoting arrangements covered by Taxpayer Alerts 2008/3 and 2008/4 should call the tax practitioner integrity service on 1800 639 745.

    We are also working through various options to help taxpayers who have been involved in these types of arrangements to comply with their tax obligations. We will provide more detailed information about these options by the time this draft TD is finalised early next year.

    Many of the trust arrangements we have examined involve cases where:

    the taxpayer's entitlement to trust income is determined by the exercise of the trustee's discretion, rather than by the rights attaching to the units - meaning that the interest is not deductible, or
    the taxpayer's entitlement to trust income and/or capital is disproportionately small compared to their contribution to the trust - meaning that the interest is not deductible in full and some apportionment of the interest deduction would be required.
    Bruce Collins
    Assistant Commissioner
    Aggressive Tax Planning
  2. NickM

    NickM Co-founder Staff Member

    20th Jun, 2005