'Aussie' John Symond sues law firm over $11 million tax bill: Experts warn on tax advice
Entrepreneurs have been warned to check and double check their decisions when it comes to taking tax advice, after a dispute between Aussie Home Loans founder John Symond and law firm Gaden's over an $11 million tax bill has landed the duo in the Supreme Court.
The dispute began in 2009 over advice allegedly provided by Gaden's which resulted in Symond's company recording a tax loss. But experts say the case is a lesson for entrepreneurs of all sized companies, warning tax advice is often a risky venture.
"It really depends on what the issue is," Hayes Knight partner Greg Hayes told SmartCompany this morning.
"The reality is there isn't always a clear position, and that's why cases like these end up in court. Sometimes the courts can't even decide the position of the case."
"I think it's probably a question of understanding the level of complexity with the specific issue and then attempting to understand the vague details that may come with that."
In a statement provided to SmartCompany, a spokesperson for Symond confirmed he had started legal action in the New South Wales Supreme Court over tax advice provided by Gadens Lawyers and Abbott Tout Lawyers.
"He is seeking damages of approximately $13 million plus costs," the statement read. The complaint against Abbott Tout has already been settled.
According to The Australian Financial Review, Symond's barrister accused Gadens of giving Symond "completely wrong" advice which resulted in the $11 million tax loss.
The court also heard the advice Symond received resulted in double taxation, and was "not in accordance with competent legal advice". The advice concerned a restructure of Aussie Home Loans, with Symond allegedly told to take $57 million in redeemable preference shares because they wouldn't attract tax.
SmartCompany contacted Gadens this morning, but no reply was available before publication.
Hayes says it's hard to extract a lesson from one specific case, but there are general principles any entrepreneur should follow when receiving tax advice.
"Good advisors will always point out if something is vague, or they'll always point out what the potential risks are," he says.
"If the advisor suggests there may be an issue with a potential level of uncertainty, then one of the questions they may put to you is if they want to get some sort of ruling request from the tax office."
Hayes says you should never take tax advice from someone who hasn't pointed out the risks, or at least isn't prepared to detail them when asked.
"In terms of dealing with an advisor, your starting point is that you're dealing with an area where they may not always be certainty. So you have to understand the complexity of the situation, and what the inherent risks will be."