The guide Understanding tax-effective investments is also available to download in Portable Document Format [PDF 170KB].
If you're considering entering into an investment arrangement that will affect your tax liabilities, there are certain things you need to know.
Many people enter into some type of investment at some stage of their lives. This could involve shares, real estate, financial products or any other arrangement where there is an expectation of receiving a benefit either immediately or in the future. Regardless of the type of investment, often the result is a reduction in taxable income or an increase in the amount of claimable tax deductions. However, as appealing as the underlying investment might be, it's important to carefully investigate the actual tax consequences before getting involved.
Sometimes, despite 'expert' opinions, the promised tax benefits of the investment might not actually be available due to incorrect interpretation of the tax law. Not getting the right advice can lead to negative tax consequences and leave you with unforseen tax liabilities.
Often, the ATO identifies investment arrangements where the promised tax benefit isn't available under the law. In this situation the arrangement is deemed to be a tax avoidance scheme. As a result, tax deductions for the investment are disallowed and investors face potential penalties.
This guide is intended to provide you with information to help you recognise some of the common types of schemes so you can reject them and avoid the negative consequences that come from participating. We encourage you to let us know as soon as possible about any arrangements you suspect may be tax schemes. This helps us to act quickly to prevent others being caught up in them.
Last Modified: Thursday, 1 March 2012