Mr John Symond, the founder of ”Aussie Home Loans” needed advice about how to extract funds from his company to complete construction of his home without paying excessive tax.
He went to one of the leading law firms in Australia who specialise in taxation advice and was advised that he could withdraw funds on a tax-free basis by redeeming preference shares issued by a new corporation which owned all of the entities making up the Aussie Home Loans Group.
Following an audit, the Tax Office disallowed the arrangement and eventually Mr Symond had to settle with the Tax Office involving a payment of $1.85m covering both his personal tax liability and loss of franking credits.
The Court held that the lawyers should have advised him not to proceed with the proposed restructure and instead advise him of other ways to achieve his objective which, if undertaken, would have resulted in a much reduced tax burden.
This leading law firm and their instructing solicitors were directed to compensate Mr Symond for his losses.
WTB 32/1453.
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