Vineyard Scheme Promoters Penalised
The Federal Court has fined Barossa Vines Limited and its directors more than
$1 million for breaching the promoter penalty provisions of the Taxation Administration Act.
The court awarded civil penalties to the ATO against a company and four people running a managed investment scheme because they failed to carry out their wine grape growing activities in accordance with the agreed terms of their product ruling.
ATO Deputy Commissioner Tim Dyce said this judgment sends a strong message that the courts will penalise scheme promoters who do not implement schemes in the way they promised.
‘We issue product rulings to give investors certainty about the tax consequences of their investment. However, the scheme must be implemented as it was described.
‘As we discovered, this was not the case and the promoters’ actions had unfortunate consequences for investors, whose deductions were disallowed.
‘The ATO always prefers a consultative approach by working with scheme designers and product issuers so they are aware of their responsibilities under a product ruling.
‘We thank those community members who came forward with information which led to this court outcome, as this helps us protect investors from scheme promoters who breach the promoter penalty provisions.’
In delivering the judgement, Justice Besanko said, ‘these are significant contraventions… The failure to heed the warnings of the viticultural experts and others and to check on the progress on the [grape vine] rootlings mean, to my mind, that the respondents were prepared to put their own commercial interests ahead of their important obligations to investors.’
Source:- https://www.ato.gov.au/Media-centre/Media-releases/Sour-grapes-for-vineyard-scheme-promoters/
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