Organisation: Australian Taxation Office
Job Title: Client Engagement Officer and Tax Specialist
Location: Various
Describe the most challenging and complex work that you have delivered as a team member,
which required you to apply your knowledge of tax legislation, accounting and auditing standards,
and any other relevant financial policies and systems.
(Limit your response to 500 words) * Mandatory
During my career with Fordham Business Advisors, the most challenging and complex work
involved my dealings with family trading trust and corporate beneficiaries who were entitled to
the income of the trust. Within my team, we were responsible for the book entries made on the
accounts and by accounting in this manner, Unpaid Present Entitlements (UPE) were taxed at the
corporate rate, rather than at the higher rate that would have occurred had the amounts been
distributed to individual beneficiaries or retained by the trustee. As such, the trust could then use
the income as working capital, or for purchasing items such as personal assets for use by individual
beneficiaries or their associates.
In late 2009 when the ATO announced that UPEs would be regarded as loans under s109D and
issued TR2010/3 using Division 7A to ensure that private companies could not make tax-free
distributions to shareholders or associates by way of loan, our clients were significantly impacted.
As a member of the firm’s Taxation Technical Group; I took initiative to read through the TR2010/3
and PSLA 2010/4 to gain a thorough understanding of the application of Division 7A under a
variety of circumstances. This led me to identify that one of my clients who had used complex
structures with multiple entities within their business group had been flagged to undertake a
Division 7A analysis. To undertake this analysis, I performed a number of key steps that identified
whether the private companies within the group were acting as corporate trustees so I could
examine transactions related to Subdivision EA, EB and E reviews, prior and current year group
contractual rights that may have established a shareholder associate relationships when the
Division 7A was applied, as well as prior and current year group restructures to determine the
relevant status of the entities and shareholders. Additionally, I analysed the prior and current year
profit-and-loss statement and payment documents, consulted the client to identify private
company expenditure and use of assets that may have constituted payments.
Having analysed this information, my team and I worked to compile a draft Division 7A paper in
which we included the changes to Division 7A provisions, including the introduction of Subdivision
EA, extended definitions of loans under Subsection 109D and 109T, chains of entitlement under
section 109XI, and the ATO’s view on UPE in TR 2010/3 and PSLA 2010/4. Due to the complexity of
the paper, I met with the client to provide a clear explanation of the information and how the
changes would impact specifically on their group. Due to a number of technical concerns, I worked
with my team to propose strategies for the client to move forward, as the use of the corporate
beneficiary had become less advantageous. As such, we advised that the client should distribute to
individual beneficiaries, conduct business through a company, and continue utilising corporate
beneficiaries, however set-up sub-trusts for UPEs on Division 7A compiling loan terms, thus
ensuring they were within prescribed timeframes and in line with TR2010/3.Tax Specialist
Client Engagement Officer & Tax Specialist
Describe an example where you used your technical expertise to lead and influence team
members to provide quality advice to either internal and or external stakeholders.
(Limit your response to 300 words) * Mandatory
Throughout my career, I have demonstrated my ability to understand complex arrangements using
multiple entities such as trusts, companies, partnerships, and superannuation funds, and my
confidence and understanding of these complex arrangements have allowed me to influence
timely and accurate decisions. As an advocate for data driven decision-making, I ensure that my
own and my team’s decisions are based on careful analysis of facts, laws and legislation, as well as
operational processes and procedures. For example, whilst working as a Senior Tax Accountant
with Fordham Business Advisors, a client approached the firm to seek advice on how to extract
funds from a private company (a cash box corporate beneficiary) in the most tax-effective way. He
had heard of other firms using a Self Managed Superannuation Fund (SMSF) to strip private
companies. In order to best support this client, I provided my expertise to the team regarding the
best steps to take for this approach, which involved transferring shares from the private company
to a SMSF by way of in-specie non-concessional contributions and receiving assessment on the net
capital gain. The private company would then pay a fully franked dividend to the SMSF, which
would entitle the SMSF to a refund of franking credits, and the dividend received by the SMSF
would be a tax-free pension. For this to be tax effective, it was necessary to ensure that the
prohibition on the acquisition of assets from related parties did not apply (s66 of the
Superannuation Industry Supervision Act) and my team lodge a private ruling to seek approval
from the ATO. However, subsequent to further consultation with the ATO, I determined that it
would be an overly aggressive strategy to pursue such an arrangement and after discussing this
with my team, we encouraged the client to withdraw his private ruling application.
Tax Specialist
Provide a brief overview of your specialist knowledge of Australian taxation law.
(approximately 100 words)
Over the years, I have gained specialist knowledge that allows me to critically examine, analyse
and interpret the law, policy and structural features of Capital Gains Tax (CGT) in Australia, and
apply CGT rules in a variety of business contexts. For example, I have demonstrated autonomy,
expert judgement and responsibility as a practitioner in this area to assist clients with managing
their CGT. This has covered all areas relating to establishing, operating and disposing of a business,
including real estate transactions, litigation and the use of trusts and deceased estates in
conveyancing and real estate development, relating to compensation payouts.
Provide an example of where you had to apply your knowledge of Australian taxation law to a
practical issue within a specific industry or market sector.
(approximately 400 words) * Mandatory
With the advantage of over four years of experience working within private accounting firms,
combined with the knowledge and expertise I have acquired through university studies, I possess
specialist skills in the provision of advice regarding Capital Gains Tax (CGT). A specific example that
clearly demonstrates this occurred whilst I was working for Fordham Business Advisors, where I
assisted a Tax Agent who was looking to sell his business and was unsure whether the disposal of
Goodwill in his business, which was established prior to the CGT provisions and subsequently
expanded over time, was considered a pre-CGT asset, and therefore would be entitled to be
disregarded under s104-10(5) ITAA 1997. In researching my client’s concern, I recalled that the
ATO’s view on Goodwill for the purpose of CGT is explained in Taxation Ruling TR 1999/16, which
reflects the High Court decision of Commissioner of Taxation v Murry (1998). Goodwill is
inseparable from a business and is a composite aspect; therefore, the whole of the Goodwill of a
business that commenced prior to September 20 th 1985 remains the same single pre-CGT asset, if
the same business continues to be carried out. Consequently, I was prompted to examine whether
the CGT event K6 would be triggered.
This led me to apply the 75% test as per s104-230 (2) ITAA 1997 and compared the market value
(excluding trading stock) to the net asset value of the company based on the fact that the client
had been in the same business since prior to September 20th 1985. This alerted me to the fact
that the 75% test may have been breached, however, to ensure the provision of high-level advice
to this client; I took initiative to review his business group as a whole, including researching small
business CGT concessions, as well as referring to tax ruling TR 2004/18, specifically in regards to
the application of CGT event K6. As a result, I determined that although there had been an
expansion of the business since that date, it had not resulted in a change to the essential nature of
the business. Along with other facts that supported that the small business CGT Relief in Division
152 test was met, the disposal of pre-CGT Goodwill would not attract CGT. As such, we applied a
private binding rule with the ATO who confirmed my advice was correct, and the decision came
back in favour of my client.
