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  • Pre-retirees warned: avoid 'too good to be true' tax schemes

    The ATO has today launched Project Super Scheme Smart, an initiative aimed at educating individuals about the potential pitfalls of retirement planning schemes.

    The program – which forms part of the ATO’s broader focus on tax avoidance schemes – provides valuable information to individuals regarding what to look out for, and what to do if they have fallen prey to a risky scheme.

    ATO Deputy Commissioner, Michael Cranston, said the purpose of the initiative is to keep Australians safe from risking their retirement nest egg through tax avoidance schemes.

    “Tax avoidance schemes have long been a target for the ATO and we have been hugely successful in identifying and shutting these down. We’ve recently seen an increase in the number of schemes that are designed specifically to target those approaching retirement.”

    “After working hard to build a nest egg to fund your retirement, the last thing you want is to inadvertently risk it all by getting involved in a risky scheme. That’s why the ATO is working to help individuals understand what a retirement planning scheme looks like,” Mr Cranston said.

    According to the ATO, individuals most at risk are those approaching retirement. This can mean anyone aged 50 or over, looking to put significant amounts of money into retirement, particularly self-managed super fund (SMSF) trustees, self-funded retirees, small business owners, company directors and individuals involved in property investment.

    While retirement planning schemes can vary, there are some common features that people should be aware of. Usually these schemes:

    • are artificially contrived and complex, usually connected with a SMSF
    • involve a lot of paper shuffling
    • are designed to leave the taxpayer with minimal or zero tax, or even a tax refund
    • aim to give a present day tax benefit by adopting the arrangement.

    Individuals caught using an illegal scheme identified by the ATO may incur severe penalties under tax laws. This includes risking loss of their retirement nest egg and also their rights as a trustee to manage and operate a SMSF.

    Mr Cranston urged individuals undertaking retirement planning to remain vigilant and to come forward if they believe they are at risk or are already involved in a scheme.

    "Retirement planning makes good sense provided it is carried out within the tax and superannuation laws. Make sure you are receiving ethical professional advice when undertaking retirement planning, and if in doubt, seek a second opinion from an independent, trusted and reputable expert.

    “We do our best to shut down dodgy schemes but the best defence is working together. Blowing the whistle on those promoting retirement planning schemes will help us stop them from risking your or others’ retirement savings,” Mr Cranston said.

    The ATO is encouraging people to report tax avoidance schemes via a confidential call to 1800 177 006, or via email to reportataxscheme@ato.gov.au. And for more information about the specific schemes, they can visit the website ato.gov.au/superschemesmart.

    “While the schemes we are targeting under Super Scheme Smart may be complex, our message is not – if it looks too good to be true, it probably is,” Mr Cranston said.

    Last modified: 28 Jul 2016QC 49732