Vineyard scheme promoters penalised
The Federal Court has fined a company running a managed investment scheme, 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 Barossa Vines Limited (and its four directors) 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, “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.”
In delivering the judgment, 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 of 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.”