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  • $9.4 million fine for tax exploitation scheme promoters

    The ATO is dedicated to identifying and disrupting promoters of tax exploitation schemes. Recently, a solicitor, financial planner and accountant were penalised nearly $9.4 million following an ATO investigation into an unlawful tax avoidance scheme spanning several years.

    Dr Bruce Rowntree, Mr Rinaldo Manietta and Mr Peter Donkin exploited their positions as advisers to promote a scheme. The scheme marketed Emission Reduction Purchase Agreements to clients to wrongfully claim a full deduction on credits that didn’t exist. Over 200 participants attempted to claim in excess of $55 million deductions as part of this scheme.

    This case demonstrates the action we will take against the enablers of tax schemes. The $9.4 million penalty reflects the serious risks that tax avoidance schemes pose to the integrity of the tax system, and the impact on investors who followed and trusted their advice.

    There are a number of ‘red flags’ to look out for to protect yourself:

    • Arrangements or opportunities that seem ‘too good to be true’.
    • Schemes that focus on tax advantages rather than commerciality, or other non-tax reasons.
    • Schemes that spruik opinions from legal or financial advisers with advice that is not tailored to your circumstances.
    • Advice that has not been written down.
    • Schemes that appear designed to inappropriately exploit new government initiatives.
    • Schemes where the promoter offering the investment is the same person who sets it up and runs it.

    To avoid getting involved in a tax avoidance scheme, you can:

    • Seek independent, written tax advice on deductions in your own circumstances. Your trusted registered tax agent is a good first point of contact.
    • Remember that just because someone is qualified, it doesn’t guarantee that they’re doing the right thing.
    • Consider running a background check on anyone giving you advice, for example by doing an Australian Financial Security Authority (bankruptcy) search.
    • Check with the ATO if you’re unsure about the advice you are given or the tax consequences of an investment opportunity. You can get general advice or request a private binding ruling.

    If you think you have been approached by a promoter of a scheme, or are inadvertently involved in a tax avoidance scheme, contact us right away.

    For more information on how to recognise a dodgy tax scheme, visit ato.gov.au/taxplanning

    * Please note that at the time of publication the case is under appeal by Dr Rowntree and Mr Donkin.

    Last modified: 30 Apr 2021QC 65482