Investigate before you invest
If you invest in a dodgy tax scheme, you are risking your money and could also have to pay any missing tax (with interest and penalties) long after the promoter and your money are gone.
There are a number of ways to check out the legitimacy of an investment and its promoter. Before you invest your money in anything, use our checklist.
- Check the promoter's licence. People who offer financial products and advice must work for a business that holds an Australian financial service licence issued by the Australian Securities & Investments Commission (ASIC).
- Obtain and read the product disclosure statement or prospectus for the investment thoroughly. As a potential investor you must be given one or the other of these documents. If you haven't received one, contact ASIC at email@example.com
- Get independent advice from an adviser who has no connection with the seller or the investment scheme.
- Check with us (or ask your adviser to do this) to find out if the scheme has a product ruling - many legitimate tax-effective arrangements do.
- Check our taxpayer alerts to find out if the scheme has any of the characteristics described in the alerts. Our alerts are early warnings of significant and emerging tax planning schemes we are concerned about and are assessing to see whether they are within the law.
- Ask us for a private ruling to confirm how the tax law applies to the arrangement. You can rely on private rulings as binding on us, as long as the scheme is carried out as described in the ruling.
- Look for the characteristics of dodgy schemes, the 'red flags' that help you distinguish a dodgy scheme from a legitimate one
You may be invited to put your money into a 'tax-effective' arrangement that you suspect may be too good to be true. Check that the promoter and the investment scheme are legitimate and seek independent professional advice.