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  • Tax avoidance schemes to watch out for

    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.

    Watch: Tax Avoidance Schemes

    Media:Tax Avoidance Schemes
    http://tv.ato.gov.au/ato-tv/media?v=bi9or7odyyjtm1External Link (Duration: 01:01)

    Current areas of concern

    Below are some areas where we have seen arrangements of concern:

    We have a full list of Taxpayer Alerts on our website. You can also find out What attracts our attention and how to report tax avoidance schemes and promoters confidentially to us.

    Common tax avoidance arrangements

    • TA 2021/4 Structured arrangements that facilitate the avoidance of luxury car tax
    • 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 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 2016/6 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 2015/4 Accessing business profits through an interposed partnership with a private company partner
    • TA 2015/3 Accessing the R&D Tax Incentive for ineligible broadacre farming activities
    • TA 2015/1 Dividend stripping arrangements involving the transfer of private company shares to a self-managed superannuation fund
    Last modified: 22 Feb 2022QC 33631