Australia Big tax bill for controversial tycoon Lex Greensill after ATO wins court battle
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A Greensill company will have to pay tax on $58 million in capital gains after losing a court fight against the tax office – and it could have big implications for everyday Australians living overseas.
The family of Bundaberg watermelon farmers built controversial finance business Greensill Capital into a globe-spanning giant, but the enterprise.
The collapse has exposedin South Australia that used Greensill Capital financing for its operations.
Taxed despite being overseas
The Peter Greensill Family Trust sold shares in the company between 2015 and 2017 and paid 100 per cent of the gains — $58 million – to founder Lex Greensill who was living in London and classed as a foreign resident.
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He would not normally pay tax in Australia for gains on a company based overseas, but the trust is in Australia and the Australian Taxation Office claimed tax should be paid on it.
The Trust took the ATO to court and lost. It appealed against the decision and has now lost that as well.
Neil Brydges, principal lawyer at Sladen Legal, said this could have big implications for Australians living overseas. A discretionary trust structure — with foreign beneficiaries — is no longer uncommon. Even small companies can be structured this way.
The decision could have implications for people moving money, for example, parents with a discretionary trust whose adult children are beneficiaries and live overseas.
"The interaction of the trust, capital gains tax, and international tax rules is complex," the tax specialist said.
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"The Full Federal Court decision provides some clarity on one aspect of those interactions and is important for any Australian discretionary trust that makes capital gains and has foreign resident beneficiaries."
Greensill's bill mounts
Justice Davies, Justice Moshinsky and Justice Colvin dismissed the appeal in a brief hearing of the Federal Court of Australia.
"The appellant is to pay the respondent's costs," the judgement read. This adds a sting to the loss: the company has to pay the legal costs of the tax office.
The ATO welcomed the verdict.
"The Court's judgment clarifies issues around capital gains assessed to the trustee of a resident trust, where the trustee makes a non-resident beneficiary entitled to these gains," a spokesperson said in a statement.
"The ATO cannot comment further on the tax affairs of any individual or entity due to our obligations of confidentiality under the law."
Lawyers for the Trust were contacted for comment.
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