Misusing partnerships with private company partners

The ATO has released Taxpayer Alert TA 2015/4 to warn taxpayers against accessing business profits through an interposed partnership with a private company partner.

The ATO is reviewing arrangements where profits are claimed to be directed through a purported partnership that has a private company as a partner. Most of the profits are taxed to the private company at the corporate tax rate, but are accessed by one or more individuals without paying additional tax reflecting their higher marginal tax rate.