If most taxpayers were asked to give an honest opinion on the payment of taxes, it is likely they would prefer it if the payment of tax was not required. However, we live in a system where we pay taxes in exchange for the provision by governments of infrastructure, services and security, and most law abiding Australian citizens appreciate this. For the average taxpayer who does not have access to the more complex tax reduction options, the creation of trusts to avoid tax is considered unfair. Generally, people will pay their taxes willingly if they think the system is equitable.
There is no reason why careful tax planning cannot be part of a system that is equitable. However, care should be taken to ensure that tax planning does not become tax evasion, especially when legitimate vehicles exist. The difference between the two can become complex, and the advice of specialist tax lawyers Brisbane is essential to ensure that any action taken is permissible.
Generally speaking, trusts to avoid tax that have no other redeeming features will be void and the Commissioner of Taxation can cancel the benefit if it’s established that a person entered the scheme to obtain that benefit. There are several definitions of just what constitutes a tax benefit, and it’s important to understand these.
One definition is an amount not included in the assessable income of the taxpayer that would reasonably be expected to be included had not the scheme existed. Another is a deduction that may not have been allowable in other circumstances ie. if the scheme had not existed. A third is a capital loss that may not reasonably have occurred had the scheme not existed and a fourth is a foreign income tax offset that would not reasonably have been allowable had the scheme not existed.
The other important term that needs to be defined in this context is that of a “scheme”. Taxation legislation defines a scheme as an agreement, arrangement, understanding, promise or undertaking, express or implied, enforceable or not by legal proceedings; and a plan, scheme, proposal, action, course of action or course of conduct.
The concept of reasonable expectation lies at the heart of the matter. This involves making an assessment as to what would have happened if the scheme was not entered into and has to be sufficiently reliable for it to be regarded as reasonable. These kinds of decisions are best made by experts in taxation law and advice should be sought from experienced Solicitors Brisbane.
Because trusts to avoid tax are void, any tax planning scheme should be based on the use of legitimate vehicles which can be very effective in arranging tax matters to their best advantage, and still complying with the law. Expert opinion and assistance is essential for taxpayers who are concerned that they stay within the bounds of the legislation.
There is no reason why careful tax planning cannot be part of a system that is equitable. However, care should be taken to ensure that tax planning does not become tax evasion, especially when legitimate vehicles exist. The difference between the two can become complex, and the advice of specialist tax lawyers Brisbane is essential to ensure that any action taken is permissible.
Generally speaking, trusts to avoid tax that have no other redeeming features will be void and the Commissioner of Taxation can cancel the benefit if it’s established that a person entered the scheme to obtain that benefit. There are several definitions of just what constitutes a tax benefit, and it’s important to understand these.
One definition is an amount not included in the assessable income of the taxpayer that would reasonably be expected to be included had not the scheme existed. Another is a deduction that may not have been allowable in other circumstances ie. if the scheme had not existed. A third is a capital loss that may not reasonably have occurred had the scheme not existed and a fourth is a foreign income tax offset that would not reasonably have been allowable had the scheme not existed.
The other important term that needs to be defined in this context is that of a “scheme”. Taxation legislation defines a scheme as an agreement, arrangement, understanding, promise or undertaking, express or implied, enforceable or not by legal proceedings; and a plan, scheme, proposal, action, course of action or course of conduct.
The concept of reasonable expectation lies at the heart of the matter. This involves making an assessment as to what would have happened if the scheme was not entered into and has to be sufficiently reliable for it to be regarded as reasonable. These kinds of decisions are best made by experts in taxation law and advice should be sought from experienced Solicitors Brisbane.
Because trusts to avoid tax are void, any tax planning scheme should be based on the use of legitimate vehicles which can be very effective in arranging tax matters to their best advantage, and still complying with the law. Expert opinion and assistance is essential for taxpayers who are concerned that they stay within the bounds of the legislation.
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