ATO warning: access company profits tax-free scheme

A Taxpayer Alert has been issued by the ATO warning taxpayers to avoid arrangements where an individual accesses the profits of a private company tax-free through the use of an interposed holding company. Besides the general anti-avoidance provisions in Pt IVA, the ATO will be actively reviewing these and similar arrangements to look at whether they contravene other sections of tax law. It notes that the Alert will apply to all arrangements when, viewed objectively, there is an indication that the dominant purpose of the arrangements is for the individual to avoid tax.