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Protect yourself against promoters marketing dodgy tax
schemes
What is tax planning?
Tax planning is when you organise your tax
affairs to give you the greatest tax advantage. Tax planning is legitimate
when you do it within the letter and the spirit of the law. You may receive
advice about tax planning arrangements and schemes from financiers,
accountants, lawyers, tax agents, financial planners and other businesses.
When should
you be aware of tax planning?
Be alert to those advisers and promoters who
market dodgy tax schemes – ones that are not within the spirit of the law
and sometimes not even within the law. If you invest in a dodgy tax scheme,
you are risking your original investment plus you could have to pay back any
missing tax with interest and penalties long after the promoter and your
money are gone.
It is often difficult to tell a legitimate
scheme from a dodgy one. Promoters can be very good at convincing you the
scheme is a good one, using professional marketing tools and attractive
sales pitches offering big tax deductions or refunds. It can be difficult to
tell if you are getting sound advice.
Here are a few lines that you may hear which
should raise a red flag in your mind:
►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
can get up to 100% tax deductions fully supported by Tax Office rulings.
►A
top lawyer and accountant have looked at the investment and they think it’s
great.
►Your
funds will be managed by an international bank (or 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.
The bottom line is: if it sounds too good to
be true, it probably is.
Before you invest:
►check
licence details free at
www.fido.gov.au – 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
Investment Commissions (ASIC)
►contact
ASIC at
infoline@asic.gov.au if you haven’t
received either a product disclosure statement or prospectus (as a potential
investors you must be given one of these)
►get
independent advice from an adviser who has no connection with the seller or
the investment scheme
►check
with us at www.ato.gov.au or by phoning us on
1800 177 006 (or ask your adviser to do this) to find out if the
scheme has a product ruling – many tax effective investments have product
rulings. A product ruling provides you with a legally binding assurance that
the tax benefits set out in the ruling will be available, as long as the
scheme is carried out as described in the ruling
►check
taxpayer alerts at www.ato.gov.au or phone us on
1800 177 006 to find out if the scheme has any of the
characteristics described in the alerts. Our taxpayer alerts are early
warnings of significant and emerging tax planning issues we are assessing
►visit
our website at www.ato.gov.au to apply to us for a private
ruling to confirm the tax effects of the arrangement. You can rely on
private rulings as binding, as long as the scheme is carried out as
described in the ruling.
If you have concerns about a promoter or a
tax scheme, call our Tax Evasion and Referral Centre anonymously on
1800 060 062.
We will investigate further and take action
to stop the promoter marketing the scheme if it seems outside the law. This
will help stop other taxpayers from investing in the scheme.
We aim to protect you against promoters of dodgy tax schemes. Not all
schemes are tax related, so check the Australian Securities and Investment
Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC)
SCAMwatch to find out about other dodgy schemes and scams.
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