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The ATO is warning investors not to be fooled by legitimate-looking tax avoidance schemes.

Deputy Commissioner Tim Dyce says illegal schemes are usually designed to appear legitimate, even to experienced investors, but there are telltale signs you can look out for.

“Tax avoidance schemes aren’t always the ‘too good to be true’ types. They can be more sophisticated than many people realise,” said Mr Dyce.

In particular, Mr Dyce advises people to watch out for complex structures and unusual financing arrangements such as round robin financing and non-recourse loans.

“If the main purpose of the arrangement is to reduce your assessable income by claiming deductions you are not entitled to, without any real investment, it is likely to be a scheme.”

In one case, promoters offered a ‘mortgage management plan’ promising to assist investors in repaying their home loan sooner. The scheme involved using the equity in their home to get additional loans for the purpose of claiming investment deductions equivalent to home loan interest payments.

It’s not just the design of the arrangement you have to look out for, but also what the promoter is promising and asking from you in return.

“We often see promoters of illegal arrangements guaranteeing that their product is ‘no risk’. They’ll also encourage you to keep the arrangement a secret or discourage you from seeking independent advice,” said Mr Dyce.

The ATO encourages anyone unsure about a tax investment they have been offered to seek a second opinion from an independent and trusted tax professional.

“At the end of the day, when it all goes wrong, it will be you and not just the promoter, who will have to face the penalties.”

Be wary of promoters that:

  • Offer zero-risk guarantees for their product.
  • Refer you to a particular adviser or expert. They may seek to persuade you by claiming the adviser has specific knowledge about the arrangement and the promised tax benefits.
  • Ask you to maintain secrecy to protect the arrangement from rival firms.
  • Discourage you from obtaining independent advice.
  • Do not have a product disclosure statement or prospectus for the product.

and find more information at https://www.ato.gov.au/General/Tax-planning/Second-opinion/

For more information about how to get out of a scheme and, reporting illegal arrangements and promoters visit https://www.ato.gov.au/General/Tax-planning/

  • Interesting! Good knowledge to know! Thanks for sharing this!

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  • definately go to reputable places only.

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  • I actually don’t like the term tax avoidance. Obviously we could all use more money, but as I’m quite fond of things like hospitals, roads, schools and emergency services I am very happy to pay my fair share of taxes.

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  • I think everyone should seek second opinion if ever in doubt.

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  • it is good to get opinions especially if you have complicated taxations

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  • I love my accountant and will stick with him

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  • I believe, just do your taxes properly and there will be no problems

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  • I find managing my finances (or lack thereof) & trying to get the family taxes done confusing enough, I don’t think I’d add to my confusion by getting involved with these sort of schemes.

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  • Thanks for the useful info.

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  • Getting another opinion is always sensible before major financial decisions.

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  • Tax has changed again this year, it is all linked through your GOV account, you cant do etax or my tax without the link now

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  • Very helpful advice, thanks for that. It seems at every corner there’s always someone/something lurking to rip of Australian families

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  • There are some really cruel people out there who are morally bankrupt and would do anything to make a buck.

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  • its amazing the number of intelligent people that think they are too smart to be conned and are lured by the chance to make easy money.

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  • When it comes to protecting your money from scammers, it always pays to remember “if it seems too good to be true, then it probably is”. I learnt a long time ago that it pays to get a second and even a third opinion, because no matter what advisers say, no-one will protect my money as well as I do.

    Reply

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