ATO loses split-super test case

Advocates of income-splitting have received a boost, with the Administrative Appeals Tribunal yesterday ruling that superannuation contributions made by a private company were not a tax avoidance strategy. The AAT found that Marjsp, owned by a husband and wife team, had not entered a tax avoidance scheme when it made super contributions for the wife.

The case was run as a test case by the Australian Taxation Office and seen as critical for small business owners who split their companies' or trusts' profits into super accounts, thus reducing their tax bills and saving for retirement.

The ATO is considering the decision and will announce shortly whether it will appeal.