Fed: ATO out to hurt business with service trusts: AMA

AAP General News (Australia)
08-15-2005
Fed: ATO out to hurt business with service trusts: AMA

CANBERRA, Aug 15 AAP - The Australian Tax Office (ATO) was trying to abolish a key
business practice and swamp professionals with red tape, the Australian Medical Association
(AMA) said today.

AMA president Mukesh Haikerwal said a proposed reform of service trusts was simply
an effort by the tax office to boost its bottom line at the expense of legitimate business
operators.

The ATO has issued a draft ruling on service trusts which are most often used by professionals
such as doctors and lawyers to run the business side of their operations.

The draft ruling is likely to catch trusts which the tax office claims have, in many
cases, been used to reduce taxable income.

The tax office also plans to investigate service trusts with incomes of more than $1 million.

But Dr Haikerwal said the tax office was going too far.

"The ATO is on a mission to abolish service trusts by stealth," he said in a statement.

"It is an attempt by the ATO to tell taxpayers how to run their businesses.

"They are ignoring all previous court decisions on the application of service trusts,
and the draft ruling is a complete about-face from their previous approach to the issue."

Dr Haikerwal said the ATO had made the situation worse by seeking to make its ruling
retrospective.

The medical association, along with other professional groups, has started petitioning
government MPs and senators to force the ATO to drop its proposals.

Dr Haikerwal said the ATO had to rethink its plans.

"As far as we're concerned, these changes have been brought in without any knowledge
of the complexities involved in running a medical practice or the pressures on the assets
of doctors and their families because of factors like medical indemnity," he said.

"The AMA wants the ATO to engage in more detailed consultation with the medical profession
before taking this draft ruling any further."

AAP sw/sb/cdh/cjh/jlw

KEYWORD: TAX

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