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Mum-and-dad businesses ‘blindsided’ by ATO trust ruling, says NTAA

The organisation says 10,000 members at the coalface of accounting are exposed by the retrospective nature of 100A draft.

Tax&Compliance Philip King 14 March 2022
— 2 minute read

The ATO’s 100A trust ruling has blindsided accountants and trustees from the small end of town, said the National Tax and Accountants’ Association.


The not-for-profit body said its members were shocked by the “retrospective nature” of the ruling because an ATO fact sheet from seven years ago had given no hint of what was to come.

“Many accountants and trustees feel let down by the fact that the guideline is proposed to apply retrospectively, to cover the same period as that covered by the factsheet,” said the NTAA submission to the ATO on the 100A draft ruling.

“This retrospectivity has blindsided trustees and tax professionals, and understandably so, given that, in the seven years following the release of the factsheet, the ATO did not find cause to update the factsheet at any time.”

The NTAA said this retrospective approach puts compliance pressure on tax practitioners with the ATO highlighting the prospect of “promoter penalties” without “reference to the types of behaviours that are likely to attract further action”.

NTAA spokeswoman Rebecca Morgan said the NTAA represented tax agents and accountants servicing local businesses at the coalface of accounting, many of which would be hit by the ruling.

“This is huge for most practitioners looking after small to medium business clients,” she said.

“They’re not the big end of town, they’re mum and dad businesses who are using these types of structures on a regular basis.

“The view that the ATO has taken is quite shocking.”

Ms Morgan said the ATO had made some concessions but they did not go far enough.

“This 100A provision has been around for 40 years, and all of a sudden the ATO has decided to come out with a fairly harsh position that challenges a lot of common distributions that have been made over the years,” she said.

“So potentially the ATO has an unlimited timeframe to amend, which is unusual for tax – normally it’s two to four years. But with 100A they can basically go back as long as they like.”

The NTAA is calling for the ATO to revise the date that the guideline comes into effect and has called attention to a pending appeal in a relevant case.

“There hasn’t been a change law or a case decision – in fact there’s a case decision going against the ATO in the Guardian case [Guardian AIT Pty Ltd ATF Australian Investment Trust v FCT [2021] FCA 1619 ],” the NTAA said.

“The ATO has an example in the ruling that’s very similar to the Guardian decision. The appeal will be interesting to watch. If taxpayers have a win with the appeal that could challenge some of the ATO’s views.”

NTAA is running seminars on the topics raised by 100A for members this week.

Mum-and-dad businesses ‘blindsided’ by ATO trust ruling, says NTAA
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Philip King

Philip King

Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

You can email Philip on: This email address is being protected from spambots. You need JavaScript enabled to view it.