• In a global business environment one of the more difficult areas of Australian tax law is the tax impact on individuals working overseas who relocate outside of Australia.
• Whether a person is liable to tax in Australia while living and working overseas depends on whether they remain a tax resident of Australia.
• For many years there have been efforts by government to address the latest tax avoidance or tax evasion strategy by inserting legislation into the tax law to target and outlaw specific schemes.
• There are specific anti-avoidance regimes including:
  • trust tax losses which states that trusts cannot claim prior year losses unless certain tests are passed; and
  • taxation of minors which imposes punitive tax rates on minors under 18 years of age to prevent streaming income to children on lower tax rates than the rest of the family.
• In addition to specific anti-avoidance rules the tax law also contains a general anti-avoidance regime known as ‘Part IVA.’
  • Under Part IVA if you are seen to have done something or not done something with the sole or dominant purpose of getting a ‘tax benefit’ then you will lose the tax benefit.
  • This includes things such as:
    • not being taxed on some income;
    • claiming a particular deduction; or
    • becoming entitled to a tax credit.

• Part IVA is a catch-all provision and applies broadly.
• Part IVA can apply to ‘legal’ means of tax avoidance and does not require there to be a deliberate intention to avoid tax.

There can be a Part IVA arrangement if you do something where the tax reasons override all other reasons or are the dominant purpose for making the investment.