Recognising and reporting tax avoidance schemes

The fact sheet Recognising and reporting tax avoidance schemes is also available to download in Portable Document Format [PDF 92 KB].

What to do if your client asks about or is involved in a potential tax avoidance scheme

Your clients may ask you about minimising tax through tax-effective schemes. They may ask you to complete a tax return based on advice they obtained from another adviser or scheme promoter.

You can help your clients avoid penalties or tax debts by explaining the difference between legitimate tax minimisation and abusive tax avoidance schemes.

Taxpayers are entitled to minimise their taxation liabilities and receive benefits provided under the law through investment activities. However, investment schemes and legal structures that do not comply with the law are considered to be aggressive tax planning arrangements - commonly referred to as tax schemes.

A tax avoidance scheme is an artificial or contrived arrangement to avoid or defer tax obligations. Schemes often involve a series of complex transactions. They typically move funds through several entities, such as trusts, to avoid or minimise tax otherwise payable. Schemes may also involve distorting the way funds are being used to enable a taxpayer to claim deductions they are not entitled to.