What are tax and super schemes
Some advisers will look for new ways to exploit the law or changes in the law. They will promote schemes to people and promise benefits that aren't legally available.
Some tax advisers may attempt to promote tax and super schemes by inappropriately claiming their schemes are supported by ATO rulings.
Schemes may target Australians planning for their retirement by advising them to send money inappropriately through their self-managed super funds (SMSFs).
Other schemes promise access to superannuation assets even though a condition of release hasn't been met.
Tax and super schemes range from mass-marketed schemes advertised to the public, to boutique or specialised schemes tailored for specific taxpayer circumstances. Some are marketed to individuals and others to large private group and public companies.
They include tax avoidance, tax evasion and super schemes, and typically involve one or more of the following:
- reducing a participant's taxable income
- increasing their deductions against their income
- increasing offsets
- inflating refunds
- avoiding tax and other obligations entirely
- accessing super benefits before meeting a condition of release.
Tax and super schemes may include complex transactions or may distort the way funds are used to avoid tax or other obligations. They may also structure arrangements to:
- incorrectly classify revenue as capital
- exploit concessional tax rates
- obscure the source of funds or the relationships between parties
- illegally release super funds early
- inappropriately move funds through several entities, such as a series of trusts including SMSFs, to avoid or minimise tax that would otherwise be payable.
Current areas of concern
Below are some areas where we have seen arrangements and schemes of concern:
- Dividend Stripping Arrangements
- Unit trust arrangements and unpaid present entitlements
- Unitisation
- Receiving payments or assets from foreign trusts
- Reimbursement agreements
- Private company benefits
- Research and development tax incentive
- Residential property purchased through illegal SMSF schemes
- SMSFs and schemes involving asset protection
- SMSFs and non-arm's length income (NALI)
- Financial products
- Employee benefit arrangements of concern
- Lump sum payments received by healthcare practitioners
- Activities not correctly classified as a business
- Private use of assets or private pursuits in business
- Illegal early release of super
- Get your luxury car tax (LCT) right
Arrangements of concern
When we identify an arrangement that represents a high risk to the tax or super system, we may issue a taxpayer alert. We issue taxpayer alerts to:
- provide an early warning that an activity or arrangement is of concern to us
- set out what we are currently doing about the arrangement
- assist you to make informed decisions about your tax affairs
- prevent widespread adoption or promotion of higher-risk arrangements.
Some of the taxpayer alerts we have issued in relation to arrangements of concern include:
- TA 2023/5 Research and development activities conducted overseas for foreign related entities
- TA 2023/4 Research and development activities delivered by associated entities
- TA 2023/2 Diverting profits of a property development project to a self-managed superannuation fund, through use of a special purpose vehicle, involving non-arm's length arrangements
- TA 2023/1 Interposition of a holding company to access company profits tax-free
- TA 2022/1 Parents benefitting from the trust entitlements of their children over 18 years of age
- TA 2021/4 Structured arrangements that avoid luxury car tax
- TA 2021/2 Disguising undeclared foreign income as gifts or loans from related overseas entities
- TA 2021/1 Retail sale of illicit alcohol
- TA 2020/5 Structured arrangements that provide imputation benefits on shares acquired where economic exposure is offset through use of derivative instruments
- TA 2020/4 Multiple entry consolidated groups avoiding capital gains tax through the transfer of assets to an eligible tier-1 company prior to divestment
- TA 2020/2 Mischaracterised arrangements and schemes connected with foreign investment into Australian entities
- TA 2019/2 Trusts avoiding CGT by exploiting restructure rollover
- TA 2018/4 Accrual deductions and deferral or avoidance of withholding tax
- TA 2018/1 Structured arrangements that provide imputation benefits on shares acquired on a limited risk basis around ex-dividend dates
- TA 2017/5A Addendum Claiming the Research and Development Tax Incentive for software development activities
- TA 2017/5 Claiming the Research and Development Tax Incentive for software development activities
- TA 2017/4 Claiming the Research and Development Tax Incentive for agricultural activities
- TA 2017/3 Claiming the Research and Development Tax Incentive for ordinary business activities
- TA 2017/2 Claiming the Research and Development Tax Incentive for construction activities
- TA 2016/12 Trust income reduction arrangements
- TA 2016/11 Restructure in response to the Multinational Anti avoidance Law (MAAL) involving foreign partnerships
- TA 2016/9 Thin capitalization - Incorrect calculation of the value of 'debt capital' treated wholly or partly as equity for accounting purposes
- TA 2016/6 Diverting personal services income to self-managed superannuation funds
- TA 2016/5 Purported tax-exempt non-profit ‘foundations’ used to evade or avoid taxation obligations
- TA 2015/1 Dividend stripping arrangements involving the transfer of private company shares to a self-managed superannuation fund
- TA 2010/5 The use of an unrelated trust to circumvent superannuation lending restrictions.
Find more information about when we issue taxpayer alerts on Practice Statement Law Administration PS LA 2008/15 Taxpayer Alerts and the taxpayer alerts page or see the full list of taxpayer alerts.
Learn about the behaviours, characteristics and tax issues that attract our attention.
Read our guide on how to report schemes and promoters confidentially to us.