Further to my last entry ASIC (OUR FINANCIAL SERVICES REGULATOR), IS SATISFIED WITH US! , hmm, let me see. About mid April I think it was, I received a call from The Director, Aggressive Tax Planning Unit (The Director). She was somewhat concerned about some statements on another web site I still have running in connection with all this and reckoned I was effectively saying that my business is “endorsed” or “approved” by The Fed Govn’t and the ATO whereas she also stated that the ATO’s policy is NOT to approve or endorse any business. Well I stuck to my guns saying I strongly disagreed as I had written confirmation from The Fed Treasurer that The Fed Commissioner of Taxation had suggested I might invite my future clients to do a particular thing in relation to getting the Fed Government’s assurances in connection with purchasing my company’s information product and implementing its content into their own lives and hence how that amounted to approval for my company to market its goods in this certain manner. She was adamant and said that if I didn’t comply with her requests, she’d refer the matter to the Australian Competition and Consumer Commission (ACCC), for further investigation. I implored her to seek competent legal advice as I thought it would be in everyone’s best interest that her unit was professionally appraised of the situation rather than continuing to seemingly make it up as she went along in areas of which it equally appeared that she was neither qualified nor competent (she’s an ATO investigative officer and not a commercial litigation lawyer after all)! I also told her that I had no problem with her going to the ACCC if that’s what she wanted to do other than that I thought it would be a waste of her time and energy as I knew I had no case to answer in respect of Section 52, The Trades Practices Act 1974 (Cth) [Misleading and Deceptive Conduct}.
After sleeping on the matter and because I value our good relationship which has ensued over several years of close interaction in obtaining a bunch of awesome private rulings in the course of developing my company’s offering of intellectual property and knowing I wasn’t obligated to do anything, I made some changes just to please her and I ‘m happy to have done so as a bit of give and take in this world is a good thing – don’t you agree? Anyway, I’ll be totally revising that site soon and gearing it solely to the professional adviser market.
Getting back, well, I’m sure you know how it is. One thing leads to another and all of a sudden it's April 21st 2010 and I'm sitting at the tax office in a small, bland room with no pictures on the wall, for an informal discussion or so I thought and it’s just them and yours truly but then it kind of changed into something else but I’ve gotta say – I didn’t mind it at all and to be honest – I enjoyed it. They’re very nice and polite people with an important job to do and they’re not evil – a major pain in the arse yes because that’s the process – but definitely not evil! You see, deep down, you know if you’re a crook or a scammer or whatever you think it is that you really are and I guess that’s why I didn’t mind being there although it’s not like I don’t have other things to do.
Low and behold, the very next day on 22nd April 2010 I had a brainwave so I emailed the Director and asked that given her title "Director, Promoter Compliance | Aggressive Tax Planning" if she'd advise me if and how the Promoter Penalty Laws impacted my business as I simply thought this was in the best interests of all concerned (i.e. The ATO, my business and its intended future clients and partners).
Take a look here to see the email I sent (name withheld for legal reasons) ...
From: Frank Genovesi [admin@betterlifepanel.com.au]
Sent: Thursday, 22 April 2010 11:49 AM
To: “Name Withheld”
Subject: Promoter Penalty Rules
Dear “Name Withheld”,
Given your title; Director, Promoter Compliance | Aggressive Tax Planning, lucky for me, you’re probably the right person to advise if and how the PP rules impact upon my business (emphasis added), as I’ve been meaning lately to write in on this one anyway!
Having closely studied them several times, I can’t see how they can apply but in case I’m wrong, consistent then in my proactive nature to compliance, I’d rather be the one to bring it up at this early juncture rather than cause any damage (remember the facts are as I said yesterday that no one has taken me up on anything yet). Hence; your timely reassurance in this matter would be most appreciated.
I’ve briefly outlined my reasoning below in an effort to assist in making your own determination (emphasis added):
1. No Product Ruling exists or is otherwise contemplated that could allow any “scheme” to be implement in a materially different way.
2. The Commissioner has already ruled (four times actually) that my scheme, the subject of mine and my company’s various PBR’s, are not subject to Part IVA given the sole or dominant purpose is NOT to obtain a tax benefit but rather, lifestyle benefits.
3. My PBR application’s description of the scheme clearly explained that private and business areas of a home are to be exclusively or almost exclusively set aside and used as such (not for mixed use). Accordingly, the FCT effectively ruled that no private expenses of the family were being claimed as business expenses under the scheme so why would the ATO go to the considerable trouble of attempting to manufacture an interpretation of this to mean something else than what it is i.e. the literal truth. As such, it renders oxymoronic, any further suggestion on its part of any semblance of tax avoidance etc.
4. Points 2 & 3 provide undeniable “Authority” from the ex-chief tax counsel who is now the FCT that no tax evasion, tax avoidance or tax exploitation etc is at play within the scheme.
5. I requested The Federal Treasurer to consult The FCT and to revert to advise how I may give certainty to my clients. Twice now, The Federal Treasurer has written to say that after speaking with The FCT, that my clients can submit PBR applications on how the tax law applies to their circumstances in relation to my scheme. I think this is a WHOPPING BIG GREEN LIGHT to commence promoting the scheme in this manner and that is what I’m doing (albeit I am currently attempting to swiftly negate your other concerns as discussed yesterday). Consider that as such, every client will be advised to only commit to the scheme if they firstly obtain a favourable PBR using our template PBR applications. In effect therefore, this is not a mass-marketed scheme as everyone’s PBR will turn out a little different here and there because there is no “settled scheme” as the FCT rightly pointed out when denying me a Class Ruling. Furthermore, applying the template to anyone’s circumstances is quick and easy and therefore prodigiously cost-effective. I’d really love to know how to make things any smarter or safer than this for the average Australian resident for tax purposes, who does not have an in-house tax lawyer at their disposal or otherwise within their budget on any basis, as do many high flyers!
6. Being that we have tried and are still trying to recruit advisers to work with us in promulgating The Procedures to their clients, they should not fear the rules if also seen to be a promoter to their clients or to their business networks.
Kind regards
FRANK GENOVESI DIP FS (FP)
FOUNDING EXECUTIVE DIRECTOR
Not yet having being informed one way or the other, I wrote to The Director again on 18th May 2010 to suggest that should she be duly suspicious of my business as being the promoter of an illegal tax exploitation scheme, that she had in fact had an obligation to act on the matter under point (17) of the ATO internal guideline PSLA 2008/7 however if she felt this wouldn’t be necessary, to put that in writing please.
On 02nd June 2010, I was advised in writing by the ATO that it would be conducting a “formal review”, the purpose of which was to establish any possible risks under the promoter penalty laws (PPL), administered by the Tax Office.
Of note; over the years as well as recently, I’ve written to the ATO on numerous occasions to invite them to visit my business premises (located within my home) and to do all things they consider necessary including inspecting files and documents, taking photos, making audio or video recordings etc, to satisfy themselves of the legitimacy of the operation.
With a bit of luck it will all be over soon and I can then get on with business as usual and get the “monkey off my back” (as the saying goes).
Make It Good Debt!