ATO reviews ‘offshore gearing’ structures

Frank Putrino, Scott Farrell and Matt Ervin examine a recent taxpayer alert regarding arrangements which use offshore related entities to facilitate the avoidance of a withholding tax liability.

The Australian Taxation Office (ATO) released Taxpayer Alert 2020/3 (the Alert) on 14 August 2020, outlining concerns that the ATO has in relation to the tax outcomes of “offshore gearing” structures.A typical offshore gearing structure is outlined below:Source: ATOThe key tax outcomes of the offshore gearing structure are:income of the Australian Trust is subject to a non-final withholding tax of 30 percent when distributed to the Interposed Beneficiary Co;Interposed Beneficiary Co will be e...

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Authors: Frank Putrino, Scott Farrell,

Published Date: 26 August 2020