Chloe Thomas tax dispute : South Australia’s wealthiest family has become embroiled in a legal dispute following a costly error involving their 22-year-old heiress.
The Thomas family, founders of Thomas Foods International, is contesting a $13.2 million tax bill after Chloe Thomas, the 22-year-old daughter of Darren Thomas, was mistakenly listed as the head of two family trusts.
According to The Australian Financial Review, company founder Christopher John Thomas, 76, and his son Darren Seymour Thomas, 52, have filed a lawsuit against the Australian Taxation Office in the Federal Court.
The error reportedly stemmed from the family’s tax advisers at EY, who incorrectly named Chloe as the controlling member of the family group for the trusts.
South Australia’s Richest Family in $13 Million Tax Dispute
Unbeknownst to EY, Chloe’s grandfather, Chris Thomas, had already been designated as the head of the family group, or the “test individual,” for one of the trusts.
In 2021, the Australian Taxation Office notified EY of the error, but efforts to align both trusts under the same test individual were unsuccessful. Consequently, a 47 percent Family Trust Distributions Tax (FTDT) amounting to $13.2 million was imposed when funds were transferred between the trusts.
The Thomas family settled the tax bill in 2023 but is now pursuing a landmark Federal Court ruling to correct the oversight, reclaim the payment, and prevent similar tax complications in the future.
The case, presided over by Justice Natalie Charlesworth, is scheduled to return to court on November 14.
Taxation lawyer Jonathan Ortner described the situation as “just the tip of the iceberg,” highlighting how common such errors have become in family trust elections.
There’s no doubt that taxpayers in similar situations will be watching this case very closely and paying attention to the precedent it could establish, especially regarding rectification,” Mr. Ortner told The Australian Financial Review.
Family Seeks Landmark Court Ruling
There is increasing pressure to simplify the complex FTDT rules as both families and tax professionals continue to suffer from unintended mistakes.
Mr. Ortner warned that without reform, “we’re going to clog up the courts, which will ultimately cost taxpayers more money.”
He emphasized that “meaningful reform discussions are essential, as the current situation cannot continue.”
Chloe Thomas, a business graduate from Bond University in Queensland, has also made her mark as an entrepreneur.
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Earlier this year, she and her partner, Harvey Bernardi, 24 — son of former South Australian Senator Cory Bernardi — launched the ready-to-drink beverage brand TQLA.
With an estimated net worth of $2.97 billion, the Thomas family is behind one of South Australia’s most successful meat processing empires. Chris Thomas founded Thomas Foods International in 1988 after acquiring a struggling abattoir, and his son Darren now serves as managing director.
Driven by strong global demand for Australian red meat, the company achieved a record $3.29 billion in revenue last year.
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