A crackdown by the Australian Taxation Office on rorts involving family trusts has drawn alarm from some advisers as some of the practices under the microscope have become common practice.
Tax advisers are also concerned at the prospect the ATO will be examining the past behaviour of family trusts, raising the prospect of bills for back taxes, inflated by years of interest and penalties.
They have also been put on notice by the ATO that deliberately providing advice on trusts to avoid tax risks can attract fines of millions of dollars under promoter penalty laws.
As trusts aim to get their affairs in order by the end of the financial year next Thursday, the ATO this week put out new guidance designed to make it clear what sort of behaviour it will prosecute.
With hundreds of thousands of family trusts in existence in Australia, the stakes are high for both those who have sought their shelter, and the ATO.
The student then agrees to pay the $180,000, less tax, to their parents, to reimburse them for the cost of bringing them up while a minor.
Unease among tax advisers started to grow in February, when the ATO first flagged the changes.
In addition, she said the ATO usually only looks back four years when auditing taxpayers and promoter penalties are only applied when promoters get a success fee, not just a normal fee for preparing a return.
