Promoters are always looking for new ways to exploit the law or changes in the law. They will promote schemes to people and promise tax benefits that aren’t legally available.
Tax avoidance schemes range from mass-marketed arrangements advertised to the public, to boutique or specialised arrangements offered directly to experienced investors. Some are marketed to individuals and may exploit people’s social or environmental conscience and generosity.
These schemes typically involve:
-
reducing a participant’s taxable income
-
increasing their deductions against their income
-
increasing rebates
-
avoiding tax and other obligations entirely.
A tax avoidance scheme may include complex transactions or distort the way funds are used to avoid tax or other obligations. It may also structure arrangements to:
-
incorrectly classify revenue as capital
-
exploit concessional tax rates
-
illegally release super funds early
-
inappropriately move funds through several entities, such as a series of trusts, to avoid or minimise tax that would otherwise be payable.
Current areas of concern
Below are some areas where the ATO has seen arrangements of concern:
There is a full list of Taxpayer Alerts on the ATO website. You can also find out What attracts the ATO’s attention and how to report tax avoidance schemes and promoters confidentially.
Common tax avoidance arrangements
-
Structured arrangements that facilitate the avoidance of luxury car tax
-
Retail sale of illicit alcohol
-
Structured arrangements that provide imputation benefits on shares acquired where economic exposure is offset through use of derivative instruments
-
Multiple entry consolidated groups avoiding capital gains tax through the transfer of assets to an eligible tier-1 company prior to divestment
-
Mischaracterised arrangements and schemes connected with foreign investment into Australian entities
-
Accrual deductions and deferral or avoidance of withholding tax
-
Structured arrangements that provide imputation benefits on shares acquired on a limited risk basis around ex-dividend dates
-
Addendum Claiming the Research and Development Tax Incentive for software development activities
-
Claiming the Research and Development Tax Incentive for software development activities
-
Claiming the Research and Development Tax Incentive for agricultural activities
-
Claiming the Research and Development Tax Incentive for ordinary business activities
-
Claiming the Research and Development Tax Incentive for construction activities
-
Diverting personal services income to self-managed superannuation funds
-
Purported tax-exempt non-profit ‘foundations’ used to evade or avoid taxation obligations
-
Accessing business profits through an interposed partnership with a private company partner
-
Accessing the R&D Tax Incentive for ineligible broadacre farming activities
-
Dividend stripping arrangements involving the transfer of private company shares to a self-managed superannuation fund
If you need assistance with your tax this financial year contact us on (02) 8277 4605. We can help you to ensure you are making the right claims.
Source: ato.gov.au
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/General/Tax-planning/Tax-avoidance-schemes-to-watch-out-for/.
Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
