Tax office cracks down on tax avoidance schemes

The Tax Office (ATO) has launched an initiative aimed at educating individuals about the potential pitfalls of retirement planning schemes.

Project Super Scheme Smart – which forms part of the ATO’s broader focus on tax avoidance schemes – provides information on what to look out for, and what to do if you fall prey to a risky scheme.

ATO deputy commissioner, Michael Cranston, says the initiative aims to keep Australians safe from risking their retirement nest egg.

“Tax avoidance schemes have long been a target for the ATO and we have been hugely successful in identifying and shutting these down. We’ve recently seen an increase in the number of schemes that are designed specifically to target those approaching retirement.”

“After working hard to build a nest egg to fund your retirement, the last thing you want is to inadvertently risk it all by getting involved in a risky scheme. That’s why the ATO is working to help individuals understand what a retirement planning scheme looks like,” Cranston said.

The ATO says people approaching retirement are most at risk. This can mean anyone aged 50 or over, looking to put significant amounts of money into retirement, particularly self-managed super fund (SMSF) trustees, self-funded retirees, small business owners, company directors and individuals involved in property investment.

Retirement planning schemes vary, but there are common features to look out for. Usually they:

  • are artificially contrived and complex, usually connected with a SMSF
  • involve a lot of paper shuffling
  • are designed to leave the taxpayer with minimal or zero tax, or even a tax refund
  • aim to give a present day tax benefit by adopting the arrangement.

People caught using an illegal scheme may incur severe penalties under tax laws such as losing rights as a trustee to manage and operate a SMSF.

"Retirement planning makes good sense provided it is carried out within the tax and superannuation laws. Make sure you are receiving ethical professional advice when undertaking retirement planning, and if in doubt, seek a second opinion from an independent, trusted and reputable expert.

“While the schemes we are targeting under Super Scheme Smart may be complex, our message is not – if it looks too good to be true, it probably is”.

To report a tax avoidance scheme call 1800 177 006 or email reportataxscheme@ato.gov.au For details about specific schemes visit www.ato.gov.au/superschemesmart

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