James, a single taxpayer in Australia, acquired all the shares of the trading company ABX Ltd. ABX incurred a tax loss of $265,00 in the last income tax year. James is a trustee and beneficiary of a family trust that generated $250,000 taxable income. Upon seeking advice, a current accounting student suggested James transfer $250,000 trust income to ABX Ltd as this will leave James with a net-zero taxable income. 

Required: 

Being a tax agent, you are required to evaluate the tax advice James received from the current accounting student. Your evaluation needs to have particular reference to ITAA1936 IVA and discuss whether Part IVA would apply.

Answer rating: 100% (QA)

The tax advice provided by the accounting student to James suggesting the transfer of 250000 trust income to ABX Ltd to offset the tax loss incurred b... View the full answer