Have you received tax advice that sounded too good to be true? It might be an unlawful tax scheme. A tax scheme may include complex transactions, distort the way funds are used to avoid tax, or incorrectly claim rebates and refunds. It 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, to avoid or minimise tax that would otherwise be payable.
Promoters of unlawful tax schemes can target small businesses and it could cost you more than your investment. You might also have to pay back tax, with interest and penalties. Most tax advisers do the right thing and give the right tax advice to their clients. However, some advisers can promote unlawful tax schemes that are too good to be true. They're only interested in their own financial gain. Tax scheme promoters may come from many professions, including accountants, lawyers, financial planners and consultants.
Be alert of the warning signs of a promoter and beware of advisers who:
- offer zero-risk guarantees for their product
- ask you to maintain secrecy to protect the arrangement from rival firms
- charge a fee or commission based on tax saved
- discourage you from obtaining independent advice
- don't have a product disclosure statement or prospectus for the product
- offer advice about phoenixing or liquidation of key companies.
Before you commit to a tax arrangement, check that it’s legit. If you think you've come across a tax scheme promoter, you can make an anonymous tip-off to us.
Find out more information on tax schemes.