Reference no: EM132648526

ASSESSMENT: CLIENT ADVICE LETTER

SUPPLEMENTARY INFORMATION FROM SCROOGE AND MICKEY

Following up on your previous request for further information about their legal and tax arrangements, Scrooge and Mickey meet with you together and provide you with the following information.

Scrooge and Mickey are seekinghigh-level advice and recommendations describing the architecture of a combination of legal structures, contractual and trust arrangements, withindicative numerical examples, which would best:

• Minimise their overalltax, while ensuring asset protection for their key assets (their respective family homes). Both Scrooge and Mickey have expressed interest in whether you think there is any scope for either or both of them to salary-package through Scrooge Financial Planning Pty Ltd, particularly in respect of a leased vehicle for their personal use under a ‘novated lease' arrangement, or perhaps personal use of a company car (whatever will minimise their overall tax payable); car park under the building; discounted loans to either or both of them; private health insurance; discounted gym/health memberships; or even (in another of Mrs Scrooge's ideas) a coffee bar in the office where they could sit with clients on the roof of the building, which could be renovated in a café-style with views of the city. Mrs Scrooge has also suggested allowing the children to do minor office work in the financial planning practice in order to help them ‘learn the business' in case they want to become financial planners later on in life; and Mickey and Scrooge are both open to this idea, particularly if it helps to minimise their overall tax position;
• Take advantage of any or all income and capital losses in eachof the trusts or other entities;
• Leverage the tax advantages, if any, of adopting Mrs Scrooge's proposal to form a multidisciplinary ‘one-stop' shop with all the other businesses and advisory practices in the building, all of whom are apparently open to any ideas you have. As part of this aspect of the advice, you should specifically address whetherthe Scrooge Family Trust, the Mickey Family Trust or the financial planning company Scrooge Financial Planning Pty Ltd should acquire, or form a joint venture or partnership with each other or any or all of these other businesses and practices, or whether this would involve them in significant capital gains tax, GST or stamp duty liability; and in what circumstances, if any, Scrooge and Mickey (or their respective trusts and/or other entities) should simply sell the financial planning practice to a third party private equity firm, Advisius Pty Ltd, which has offered to buy it for a price which both Scrooge and Mickey estimate is substantially below the total replacement cost of all the financial planning company's assets.

Provide detailed evidence of your conclusions, and where possible, diagrams and specific examples supporting your argument. Be careful to outline your reasons, specifying all relevant provisions of relevant legislation or regulations (and any particularly important and relevant cases, where you consider this necessary). In addition, state - explicitly and specifically - any factual assumptions you need to make in answering the clients' questions, provided they are consistent with the broad parameters set out by your clients. Where Scrooge and Mickey have not provided sufficient information for you to definitively answer an aspect of the problem, you'll recall from our workshops that you should use a "If this, then that"; "if something else, then xyz' approach to answering their questions.

Remember that Mickey and Scrooge have come to you because of your expertise and your ‘can do' attitude to tax planning. Above all, as clients paying your considerable fee, they want answers on what they can do legally, not what they can't do.

Attachment:- Client Advice Letter.rar