That's not all they state:The ATO announcement specifically stated that "selling to a related party and buying them back the next day to gain a tax advantage" is a no no.
(a)
the taxpayer disposes of, or deals with, the asset and at the same time, or within a short period after, acquires the same or substantially the same asset;
(b)
shortly prior to, or at the time of, disposing of, or dealing with, the asset the taxpayer acquires the same, or substantially the same, asset;
(c)
shortly prior to, at the time of, or shortly after disposing of or dealing with the asset the taxpayer enters into an arrangement to acquire the same, or substantially the same, asset at a future point in time at a price that is substantially the same as the sale proceeds received on disposal of the original asset and acquires that asset under the arrangement;
(d)
shortly prior to, at the time of, or shortly after disposing of, or dealing with, the asset the taxpayer enters into derivatives or financial instruments that substantially provide continued exposure to the risks and opportunities of the asset, as if the taxpayer had continued to hold the asset;
(e)
shortly prior to, at the time of, or shortly after disposing of, or dealing with, the asset the taxpayer enters into arrangements under which the taxpayer is entitled to, relative to the taxpayer's prior interest, the future income produced by the asset and/or any capital appreciation in the asset, or to a reimbursement for any future income produced by, or capital appreciation in the asset;
(f)
the taxpayer disposes of or deals with the asset to a company which the taxpayer is a member of, or to a trustee of a trust the taxpayer is a beneficiary or an object of, and the taxpayer controls or influences the company or trustee, or is the trustee or appointor;
(g)
the taxpayer disposes of or deals with the asset to a company which the taxpayer controls or has influence over but is not a member of, or to a trustee of a trust which the taxpayer controls or has influence over or is the trustee, or appointor of, but is not a beneficiary or an object of. The financial benefits of the asset are not distributed to the members or beneficiaries/objects but rather the company or trustee disposes of the asset to the taxpayer or enters into arrangements to provide the financial benefits of the asset to the taxpayer;
(h)
the taxpayer disposes of the asset or otherwise deals with the asset in circumstances where there is a significant overlap in the individuals who had direct or indirect interests in the asset before and after the disposal or dealing. For example, the asset is transferred from one wholly owned company to another, or between two trusts with the same trustee and class of beneficiaries or objects; or
(i)
the taxpayer disposes of the asset to family members and an arrangement or understanding exists between the parties to the effect that the asset will be re-acquired by the taxpayer, the future income produced by the asset and/or any capital appreciation in the asset will be provided to the taxpayer or applied for the benefit of the taxpayer, or there is otherwise no change in how the financial benefits produced by the asset are utilised by the taxpayer when compared to what occurred prior to the disposal.
Its still hard to prove if you wait a few days...
The taxpayer has to come up with the evidence that they weren't trying to do anything illegal
Sounds like a ridiculous situation. I can't believe that the burden is on the defendant.
"Prove it was a genuine trade."
"You'll have to get a brain scan from three months ago, sir."
Unfortunately tax law states that the burden of proof alway lies with the taxpayer.
The ATO only has to believe that you are trying to avoid tax and they can zap you. They don't have to prove anything.
The taxpayer has to come up with the evidence that they weren't trying to do anything illegal. Then that evidence has to be believed by a tribunal or court if the taxpayer appeals.
Most tax law sides with the ATO.
Oh bloody hell, the taxpayer use to have to supply the gun, then he had to provide his own bullets and now you are telling me he has to pull the trigger as well !!!
Unfortunately tax law states that the burden of proof alway lies with the taxpayer.
The ATO only has to believe that you are trying to avoid tax and they can zap you. They don't have to prove anything.
The taxpayer has to come up with the evidence that they weren't trying to do anything illegal. Then that evidence has to be believed by a tribunal or court if the taxpayer appeals.
Most tax law sides with the ATO.
It shouldn't be too hard pulling out a news article, futures levels or commoditiy prices to make up some bs reason to why you thought the price was going to fall...
Anything would do - N Korea testing weapons, new financial data comming out, suicide bombing in middle east (shoudlnt be too hard as there's one over dayand say thats why you thought it was going to fall.
That might work if you are a frequent trader and had evidence of previous instances, I don't know if it would work for buy and hold investors though.
IIRC if you are registered as a trader your trading profit/loss is not a CGT event so the "wash sale" will not apply since it only applies to assets that trigger a CGT event.thats correct ----- if u r registered as a trader with the ATO (bless their souls) ----- and u have traded the instrument (stock/whatever) in question a "few times" previously --- they (that would be the tax man) DON'T have a leg to stand on ---
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