One of Australia’s largest accounting firms has denied providing incorrect tax advice, despite a tech entrepreneur’s claims that poor advice resulted in a $3.5 million tax bill.
Earlier this year, Spreets founder Dean McEvoy filed a statement of claim with the NSW Supreme Court, claiming that tax advice he received from Deloitte resulted in him receiving a bill from the ATO of $3.5 million.
Around November 2010, Mr McEvoy engaged with the Deloitte M&A team to sell Spreets, and on 25 November 2010, Mr McEvoy received a non-binding letter of offer from Yahoo!7 to acquire Spreets for $37 million.
Mr McEvoy alleged that between 2 December 2010 and 18 January 2011, members of the Deloitte team provided tax advice that Binary Investments Pty Ltd, as trustee for the D. McEvoy Trust, would be eligible for the CGT discount and the 50 per cent active asset exemption and the rollover relief under the Small Business Concessions, before retracting that advice on or about 7 February 2011, saying that their initial advice was incorrect.
In Deloitte’s defence, which was filed with the NSW Supreme Court last month, the firm denied Mr McEvoy’s claims, saying that at no time did Mr McEvoy and Deloitte enter into any agreement under which Deloitte was to provide taxation services to Mr McEvoy.
Around February 2013, the ATO commenced a risk review of Mr McEvoy and his associated entities, including Binary Investments, which proceeded to an audit.
The audit found that Binary Investments was only allowed the CGT discount on 450 of its 22,914 shares in Spreets, and did not qualify for the Small Business Concessions because it failed to meet the maximum net asset value test due to the net value of the relevant assets exceeding $6 million.
The ATO issued a Notice of Amended Assessment on or about 24 November 2014 in respect of the financial year ending 30 June 2011, in which the ATO levied tax, penalties and interest payable of $3,517,138.11 against Binary Investments.
Deloitte denied Mr McEvoy’s claims that the ATO bill, as well as other losses, was the result of duty of care breaches by Deloitte.
When contacted for comment on the matter, a Deloitte spokesperson told My Business’ sister publication Accountants Daily that “as the matter is before the Court and Deloitte is defending the case, it is inappropriate for us to comment at this time.”