Taxation Law

Taxation law covers a broad range of activities, such as:

• Tax planning and tax advisory services
• Tax audits
• Tax disputes and litigation

Tax planning and tax advisory services

At VanderFox, our tax planning strategies begin with a detailed assessment of your circumstances and objectives.

We advise our clients to be proactive in taxation matters; consultation with an advisor should always be a priority before proceeding with implementation of a transaction.

Here are a few frequently encountered examples of tax advisory services which we can assist with:

• setting up holding structures for new businesses / startups which are commonly understood by bankers and venture capitalists
• income tax / GST / duty / land tax / payroll tax modelling on transactions and investment portfolios in the context of business restructures and decisions to buy or sell assets
• working alongside transaction lawyers and your external accountant on major deals
• calculating capital gains tax advice on selling an investment property or business
• tax residency advice
• eligibility (or pro-rated calculations) to apply the CGT main residence exemption
• specialist tax advice, such as controlled foreign company reviews
• applying for private rulings from the ATO or Revenue NSW on transactions if clarity and protection is sought in relation to a contemplated transaction

Tax audits

Tax audits can result in significant business disruption and diversion of resources to address. We guide our clients on the process of co-operation with revenue authorities and asserting taxation positions with a view to finalising tax audits swiftly and cost-effectively.

We hold significant experience with managing and completing tax audits with the ATO and State-based revenue authorities.

In a worst-case scenario, should a search and enter notice be issued we can also supervise the exercise of law enforcement warrants and revenue authority notices to search and seize documents and assets.

Tax disputes and litigation

Litigation is undesirable in any context, and particularly so in taxation matters. However, it is sometimes inevitable that controversy arises over the tax treatment of a transaction or series of transactions.

We have extensive experience in preparing taxation objections, and if a negotiated compromise is unable to be achieved at objection, to conduct an administrative review of unfavourable taxation decisions in an appropriate forum.

Trusts

We can help you with:

• reviewing your current business structure and affairs
• setting up a new family trust, charitable trust, special purpose trust or unit trust
• reviewing and amending existing trust deeds
• trust restructuring activities

Reviewing your current business structure and affairs

One of the first things we get asked by new clients is whether they should use a trust for tax planning purposes.

Trusts are commonly used in advanced tax planning strategies but they do not necessarily suit every commercial or private circumstance.

In practice, planning and structuring engagements are complex and there is no “one size fits all” approach to achieving competing commercial and family objectives.

Further, trust law and its intersection with taxation laws is often in a state of flux and legislative reform and interpretation. For example:

• previously in NSW if someone wanted to pass their farm on to a child’s trust or company to operate, there would be stamp duty charged on that transfer – however, since May 2022 this is no longer the case
• widespread alarm over the ATO’s issuing of a revised draft tax ruling on section 100A of the Income Tax Assessment Act 1936 together with a High Court decision giving primacy to the operation of taxation legislation over trust law which culminated in an Australian Government announcement in April 2022 to provide certainty and stability for affected family trusts

In our experience, trust deeds are not “set and forget” documents. Our lawyers assist with establishing new trusts and reviewing existing trust arrangements to ensure they remain fit for purpose and compliant with evolving trust law and taxation rules.

For these reasons, at VanderFox, we carefully assess your circumstances and provide you with up to date guidance on asset structuring and tax planning activities.

Family Trusts

Family trusts (also known as discretionary trusts) involve a trustee holding assets on behalf of one or more beneficiaries; here, the control and legal ownership of trust assets is separated from the enjoyment of the trust assets.

Family trusts may assist clients with planning and managing the taxation of family wealth but are not always a tax-efficient holding structure; and in some cases, a family trust may be cost ineffective or result in unintended punitive and/or complex administration consequences.

Family trusts are not appropriate for undertaking commercial investments with other investors: see Unit Trusts below.

Unit Trusts

Unit trusts seek to achieve the separation of control and enjoyment of trust assets while also establishing a level of commercial certainty in the governance and participation in income and capital of the unit trust.

Unit trusts are commonly encountered in commercial enterprises such as property development or other forms of collective investment.

Charitable trusts

Trusts may be established for charitable purposes. We can assist you with setting up an ATO-compliant charitable trust, applications for registration with ACNC for registration as a charity, and registration as a deductible gift recipient (DGR).

Special purpose trusts

Special purpose trusts are used in a broad range of applications, including the protection of beneficiaries with special needs or to achieve a specific purpose or to implement a particular transaction.

Reviewing and amending existing trust deeds

Over time, situations can arise where the terms of a trust deed become “out of date” and need to be amended to accommodate changes in circumstances or taxation law.

For example, the introduction of surcharge purchaser duty in New South Wales means that trust deeds which are not amended to preclude foreign persons from benefitting from a trust will result in additional duty on dutiable transactions.

Further, with the introduction of duty in NSW on changes in beneficial ownership of dutiable property, extreme care should be taken by trustees and professional advisors when contemplating amendments to existing trust arrangements or restructuring trust assets.