Tax Reviews, Audits, Controversy and Disputes

We have extensive experience acting for private enterprise in reviews, audits and disputes with the Australian Taxation Office (ATO) in a range of Federal tax matters.

Our tax team are experts in their field widely recognised for their commitment to developing innovative resolutions to tax reviews, audits, and disputes. We have a wealth of experience and knowledge in substantive revenue laws, ATO policies and procedures, taxation and judicial administrative law, and tribunal and court rules.

In all tax reviews, audits, or disputes we adopt a collaborative approach to ensure that we remain dedicated to managing risk and minimising disruption to your business throughout conduct and life of the review, audit, or dispute.

We provide advice and services in the following areas relating to reviews, audits, controversy, and disputes relating to pre and post lodgement reviews, audits, and disputes:

• Questionnaire responses and audit activities

• Informal and formal information requests and document exchange

• Voluntary disclosures

• Objections

• Penalty and interest remission applications

• Settlement negotiations

• Debt enforcement management

• Freedom of Information applications

• Administrative reviews, court appeals and litigation

• Tax agent disciplinary activities

Our Tax Team regularly provide updated industry thoughts here and have published a Tax Disputes Series which includes the following topics:

• Part 1 - Early Engagement Strategies With The ATO

• Part 2 - Voluntary Disclosures

• Part 3 - Settlements

• Part 4 - Mitigation Of Interest And Penalties

• Part 5 - ATO Reviews And Audits

• Part 6 - Objections

Our services are not limited to once an ATO review, audit, or dispute has commenced.  Our services incorporate those to prepare for a review, audit, or dispute including as part of the ATO ‘Top 500’, ‘Next 5000’, or ‘Justified Trust’ programmes, such as:

• Reviewing your tax risk governance framework

• Identifying any tax risks and ways to mitigate those risks 

• Early engagement strategies such as voluntary disclosures or pre-lodgment reviews

Tax Reviews, Audits, Controversy and Disputes

Cryptocurrency

Through the application of blockchain technology, cryptocurrency has changed the landscape for personal and business transactions. Cryptocurrency has enabled transactions to become more efficient and effective across the globe. As cryptocurrency becomes more popular it is crucial for individuals and businesses to understand the legal implications.  

Our tax team are experts in their field and are committed to navigating client’s through the developing legislation around cryptocurrency. Our team offers a wealth of experience and knowledge in revenue law and procedures complimented by an understanding of digital currencies which enables them to understand and guide clients in this new area of law.

We provide advice and services on the following areas of cryptocurrency:

• Advice on the income tax treatment of cryptocurrency transactions;
• Establishing reasonably arguable position supporting tax positions taken on cryptocurrency transactions;
• Applications for private binding rulings to the Commissioner of Federal Taxation regarding the appropriate income tax treatment of cryptocurrency dealings;
• Advising on disputes with the ATO on the treatment of cryptocurrency disposals;
• Effective structuring for cryptocurrency investments and businesses;
• Advice on the GST implications and compliance requirements when trading cryptocurrency and transacting in cryptocurrency; and
• Succession planning and protecting your digital assets for beneficiaries.
   

For more information on cryptocurrency please contact Laura Spencer.

Cryptocurrency News

Employee Share Schemes

and Incentive Plans

Retaining high performing employees can be key to ensuring the long-term success and growth of a business. Implementing an employee share schemes (ESS) or incentive plan can be an effective means by which businesses can motivate and maintain valued employees.  

ESS provide high performing employees with the ability to acquire equity in your company through the acquisition of discounted shares now or in the future. However, the qualifying requirements for ESS may, particularly for companies in the Small to Medium Enterprise market, mean they are not the best solution to incentivize staff. In these cases, tailored incentive plans can instead be used.

Whether adopting an ESS or an incentive plan, benefits will be seen by employers as a result of their key employees being motivated to stay with the firm and drive the business’ success. They also benefit employees by offering tax effective means of gaining financial rewards from the current and future success of the business.

The Business Law team at Sladen Legal are dedicated to working with clients to help develop employee share schemes or incentive plans that enable businesses to grow and prosper. Whether you are a small business, a privately held Australian enterprise or a public entity, we will work closely with you to develop tailored schemes or plans that suit your needs, encourage your key staff to stay with the company and ultimately inspire the evolution and development of your business.  

We can assist with:

• Providing advice on the most ideal model for your business, whether that be as ESS or an incentive plan.

• Advising on the compliance requirements of ESS and incentive plans.

• Preparation of ESS documentation including letters of offer, information documents for employees, application forms, salary sacrifice agreements (if applicable) and notices of entitlements.

• Preparation of relevant incentive plan documentation including shareholder agreements and Corporations Law compliance documents.

• Tax dispute advice services including responding to ATO reviews and audits of ESS or incentive plan arrangements, preparation of position papers and objecting to taxation decisions.

For more information on ESS and incentive plans please contact Laura Spencer.

ESS & Incentive Plan News

Tax Consolidation and TSFAs

Sladen Legal has significant experience in guiding clients through every stage of the tax consolidation process.

Whilst tax consolidation can provide significant opportunities for wholly-owned groups, especially in the current economic climate, the tax consolidation legislation is extremely complex and evolving and requires careful application.

Our tax consolidation lawyers have previous experience in large accounting firms and understand the technical and accounting complexities associated with the consolidation process. This gives us the unique ability to provide our clients and their advisors with strategic and practical advice as well as prepare all requisite documentation.

We offer discounted rates to accounting and professional services firms that exclusively engage us to prepare tax sharing and funding agreements and other related documentation for their clients.

Our clients include large and mid-tier accounting and professional services firms, public companies, private corporate groups and their advisers.

Why consolidate?

Tax consolidation can provide significant tax efficiencies and savings when restructuring and administering corporate groups.

To consolidate, a group must consist of an Australian-resident holding (‘head’) company and at least one wholly-owned resident subsidiary (which may be a company, trust or partnership) (specific rules apply as to eligibility requirements for membership of a consolidated group).

A consolidated group is treated as a single entity for income tax purposes and the head company is generally liable for the income tax debts of the group. The head company would maintain a single franking account and accumulate any tax losses of the group.

The tax consolidation process requires careful planning, and the assistance and guidance of experienced professionals can be invaluable:

• the ability to continue to use the prior year tax losses of the members to offset against the consolidated group’s taxable income can provide cash-flow advantages to the group, provided that various tax loss transfer and utilisation rules are satisfied;
  

• as intra-group transactions are disregarded for income tax purposes, tax consolidation can facilitate tax effective means for undertaking corporate restructures. Such opportunities must however be carefully reviewed in the context of the anti-avoidance provisions in the income tax legislation. Further, any stamp duty consequences from the transfer of business assets would depend on the nature and location of each asset and must also be carefully considered;
  

• when a consolidated group is formed or members join an existing group, the tax cost of each subsidiary’s assets is reset at the relevant tax cost setting amount (TCSA) to recognise the cost to the head company of those assets. The TCSA of a subsidiary’s assets is based on a share of the allocable cost amount (Entry ACA) of each entity (being the cost of the head company’s interest in the subsidiary, adjusted for liabilities, undistributed profits, distributions and losses of each entity and tax deductions to which the head company would become entitled). ACA calculations are complex and require careful consideration of a number of technical concepts. With existing entities, we recommend that the tax impact of resetting the cost of assets be carefully reviewed prior to consolidating;
  

• when an a subsidiary leaves a consolidated group, the head company is required to calculate the TCSA of its interest in that subsidiary by means of an Exit ACA calculation and allocate the ACA to its shares in that subsidiary; and
  

• it is crucial to have the appropriate documentation in place to avoid unintended and unnecessary tax consequences. For example, if the head company fails to pay a group income tax liability by the due date, subsidiary members are jointly and severally liable for that liability. This situation can be avoided by group members executing a valid Tax Sharing Agreement which reasonably allocates the liability amongst the parties. A group member would then only be liable for their portion of the group debt, calculated in accordance with the terms of the Agreement. A Tax Sharing Agreement should also provide for the entry and exit of members to and from the consolidated group so as to ensure that:
  

  • when members join a consolidated group, the head company’s and the new member’s obligations are appropriately documented; and
    

  • when a member leaves the consolidated group, it obtains a ‘clear exit’ from income tax liabilities that are not due and payable at the time of the exit - this is especially reassuring for the third party purchaser of the shares in a subsidiary member of a consolidated group.

A Tax Funding Agreement can also provide an internal funding arrangement to ensure that the head company can fund the consolidated group's tax liability payments by members funding their proportion of the liability.

How we can help you

We can assist with preparing documentation for, and advising on:

1. forming a tax consolidated group, including:
   a. eligibility issues;
   b. transferring prior year income tax losses from a subsidiary to the head company;
   c. Entry ACA calculations;
   d. Australian Taxation Office notification requirements; and
   e. Preparing a comprehensive report for all members of the group.

2. new members joining an existing group;

3. members leaving an existing group;

4. Exit ACA calculations;

5. intra-group transactions;

6. stamp duty consequences associated with intra-group transactions;

7. restructures involving new and existing consolidated groups;

8. Tax Sharing and Tax Funding Agreements; and

9. varying an existing Tax Sharing Agreement and/or a Tax Funding Agreement.

Further Information

Schedule of fees – Tax Consolidation

Capability Statement - Tax Consolidation

International Tax

Indirect Tax Sharing and Funding Agreements for GST Groups

Taxation Lawyers