The recent attempt by the ATO to freeze the assets of the foreign vendor of Myer was very strange, if not stupid. Commenter’s have called it ludicrous, incompetent and bureaucratic heavy handiness. The details of the float of Myer were very public and were well known weeks before the bungled attempt to freeze bank accounts. So, the ATO deserve criticism for their legal process failures. What is more concerning is their interpretation of the law. A profit on sale of Australian shares should not be taxable to a foreigner – since 2006 we have encouraged foreigners to invest here, so Capital Gains Tax (CGT) does not apply on shares. This policy is similar to the practice of other OECD countries. CGT does apply on real property sold by a foreigner and Myer sold a property in August 2007, which it should have (and presumably) declared in 2008 tax year. That profit to the company was less than the tax being chased. So, unless there is a new interpretation or there is something else to the transaction(s), there is no tax payable by the foreign shareholders on the float. Even more concerning is the presumption of guilt and the assumption that TPG is not intending to lodge a tax return when it is due, and is not intending to pay any tax whatsoever! It’s the same as labelling everyone a tax avoidance cheat, a year before they do their tax returns (just because they might!).
3rd-December-2009 | 