ATO warns SMSF trustees about tax avoidance schemes

The Australian Taxation Office (ATO) is warning self-managed superannuation fund (SMSF) trustees and retirees about the risks of illegal tax avoidance schemes.  

ATO Deputy Commissioner James O’Halloran said the ATO knew most people did the right thing and worked hard to save for their retirement.

“If a taxpayer becomes involved in any illegal arrangement, even by accident, they may incur severe penalties, jeopardise their retirement savings, and risk losing their rights as a trustee to manage their own fund,” Mr O’Halloran warned today.

The ATO today released its new Super Scheme Smart program to alert taxpayers about what to look for.

Super Scheme Smart provides relevant case studies and information to ensure they are well-informed about illegal arrangements. It also explains the significant risks associated with those arrangements, what warning signs to look for, and where to seek help.

“We are working hard to shut down illegal arrangements quickly, but the best defence for taxpayers and their advisers is to be aware,” Mr O’Halloran said.

“Promoters of the arrangements may overtly target SMSF trustees and self-funded retirees, including small business owners and those involved in property development who have significant assets.

“The arrangements may be cleverly disguised to look legitimate, involve a lot of paper shuffling and be framed as giving a taxpayer a minimal or zero amount of tax, or even a tax refund or concession.

“Just because an arrangement is structured in a way that appears to satisfy certain regulatory rules does not mean it is legal. Such arrangements can put SMSFs at significant risk of breaching the superannuation regulatory rules as well as taxation law.”

The ATO has previously raised concerns about dividend stripping and contrived arrangements involving diversion of personal services income to an SMSF. The ATO warned some of the new schemes included:

Artificial arrangements involving SMSFs and related-party property development ventures. Arrangements where an individual or related entity grants a legal life interest over a commercial property to an SMSF. This results in the rental income from the property being diverted to the SMSF and taxed at lower rates while the individual or related entity retains legal ownership of the property. Arrangements where individuals (including SMSF members) deliberately exceed their non-concessional contributions cap to manipulate the taxable and non-taxable component of their fund balance on refund of the excess.

Mr O’Halloran said taxpayers should remember that any scheme that looked too good to be true, usually was.

If you have information about these arrangements or would like to make a voluntary disclosure, phone 1800 060 062 or email

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