News Release from the Australian Tax Office
Beat the investment and tax dodge
scheme promoters
with this advice from the Australian Tax Office
Promoters of dodgy investment schemes are simply
fishing for your money. Their bait is the promise of
high investment returns and generous tax breaks.
Take the bait, and you could be the one that’s
bitten. You could lose your money and end up with a
tax bill.
The advice b lowcan help you to beat the dodgy
promoters and protect your hard-earned money.
Investigate before you invest
You may be offered investments that promise large
tax refunds, or arrangements that put your money in
an offshore tax haven.
It can sometimes be hard to tell a good
investment from a bad one. Promoters can come with
convincing sales pitches, and it can be difficult to
tell if you’re getting sound advice. It can be
confusing, with promoters offering you big tax
deductions, especially towards the end of the
financial year.
Before you commit to any investment, get
independent advice to make sure the investment is
sound, including any claimed tax benefits. This is
important because our tax system is based on
self-assessment and you are responsible for your tax
return, even if it is prepared by your tax agent.
If you invest in a dodgy investment scheme, you
could be left with the tax bill long after the
promoter and your money are gone. If you don’t
investigate before you invest, you’re risking your
hard-earned money, and you might have to pay back
any missing tax, plus interest and penalties.
Tempting bait
Beware of tempting sales pitches. If it sounds
too good to be true, it probably is. These are a few
lines that you should never take without a thorough
check:
-
‘There are no risks. We guarantee the
returns.’
-
‘You don’t need credit or asset checks, we’ll
lend you the money.’
-
‘Even if the investment doesn’t go ahead,
you’ll still make a profit from your tax refund.’
-
‘Sign this secrecy agreement – we don’t want
our competitors stealing our ideas.’
-
‘There’s no need to ask the Tax Office if it’s
okay. We already have a ruling.’
-
‘You’ll receive cash back in your pocket as a
commission rebate.’
-
‘You can get up to 100% tax deductions fully
supported by Tax Office rulings.’
-
‘A top lawyer and/or accountant have looked at
the investment and they think it’s great.’
-
‘Your funds will be managed by an
international bank (or an international trust, or
global corporation...).’
-
‘We’ll put your money in a tax-free overseas
account.’
-
‘You can run your business through your own
offshore company.’
Questions to ask before investing
Does the salesperson work for a licensed
business?
People who offer financial products and advice
must work for a business that holds an Australian
financial service licence, issued by the Australian
Securities and Investments Commission (ASIC). You
can check licence details free at
www.fido.gov.au
or by calling ASIC’s Infoline1300 300 630.
Does the investment have a product
disclosure statement or a prospectus?
As a potential investor, by law, you must be
given either a product disclosure statement or a
prospectus. Contact ASIC at
infoline@asic.gov.au or phone 1300 300 630
if you don’t get a current product disclosure
statement or prospectus.
Have I got an independent second opinion
on the investment scheme?
Before you sign anything, get independent advice
about the investment from an adviser who has no
connection with the seller or the investment scheme.
Have I checked with the Tax Office to
make sure the arrangement has a product ruling?
Many tax effective investments have a Tax Office
product ruling. A product ruling provides you with
legally binding assurance that the tax deductions
set out in the ruling will be available provided the
scheme is carried out as described in the product
ruling. Call us or an independent tax adviser to
find out if the scheme has a ruling.
More information
-
You can find out more about our product
rulings at ato.gov.au or by
calling 1800 177 006, or you can ask an
independent tax adviser.
-
The Australian Securities and Investments
Commission also posts warnings about known dodgy
investments on fido.gov.au and
investigates unlicensed financial advisers.
For more information about offshore arrangements,
you can find the booklet Tax havens and tax
administration (NAT 10567) at
www.ato.gov.au
If you have been offered a dodgy
investment scheme, you can tell us about it
anonymously by calling 1800 060 062.
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