A $13 Million Tax Blunder: The Thomas Family's Legal Battle
The Thomas family, South Australia's wealthiest, is in a legal dispute with the Australian Taxation Office over a $13.2 million tax bill. The issue stems from a mistake made by the family's tax advisors at EY, who incorrectly named 22-year-old heiress Chloe Thomas as the head of two trusts. This blunder has led to a 47% family trust distributions tax (FTDT) on the money flowing between the trusts.
The family's patriarch, Christopher John Thomas, 76, and his son, Darren Seymour Thomas, 52, are suing the ATO in the Federal Court. The mistake was identified by the ATO in 2021, but attempts to rectify it have been unsuccessful. As a result, the family paid the substantial tax bill in 2023 and is now seeking a court ruling to correct the error and recover their expenses. The case is set to return to court on November 14 before Justice Natalie Charlesworth.
Taxation lawyer Jonathan Ortner warns that this is just one of many family trust election mistakes. He suggests that similar taxpayers will closely monitor the case and its potential precedent. The complexity of FTDT provisions has come under scrutiny, with calls for reform to prevent such errors and the associated court costs. The Thomas family's situation highlights the need for clearer tax regulations to avoid such financial disasters.
Chloe Thomas, a business graduate from Bond University, Queensland, has been involved in the family's business ventures. She launched TQLA, a ready-to-drink beverage, with her partner, Harvey Bernardi, 24, the son of former SA Senator Cory Bernardi. The Thomas family's success is rooted in Thomas Foods International, a meat processing business founded by Chris Thomas in 1988, now managed by his son Darren, who steered the company to a record $3.29 billion in revenue last year.
