Taxpayers warned of four abusive tax schemes

Simon Hampel · 25th Jun, 2008

ATO Media Release: Taxpayers warned of four abusive tax schemes

The Tax Office today issued four taxpayer alerts warning people of its concerns about abusive tax schemes.

These alerts cover employee savings plans, salary deferral arrangements, a profit washing scheme and a liquidation scheme.

Tax Commissioner Michael D’Ascenzo said people involved in or considering these schemes should be warned they face close examination by the Tax Office.

“These schemes are variations on ones that have concerned us before and we are considering whether the promoter penalty laws should be applied to people promoting them,” Mr D’Ascenzo said.

“We are concerned people may be tempted by such schemes as a way to avoid their tax as 30 June approaches.

“I ask again today that anyone involved in any abusive tax scheme to come forward and tell us about it as soon as possible.

“If people contact us before we begin an audit they will be entitled to a reduction in any penalties that may apply.

“Also if you know of people peddling abusive tax schemes, please contact us so as to protect others who may otherwise be persuaded to enter into these schemes.

“Abusive tax schemes tend to have a flow on effect, meaning people caught up can have a large tax debt and substantial penalties when they are caught.

“Anyone who is uncertain about their tax obligations should seek independent financial advice or apply for a Tax Office ruling.”

Employee savings plans (taxpayer alert 2008/13)

These schemes use a trust structure to attempt to convert salary or wages income into a capital gain, to reduce their tax.

Salary deferral arrangements (taxpayer alert 2008/14)

These schemes involve an employee deferring their salary and instead receiving a payment categorised as a loan which is claimed not to be taxable. In later years the employee is paid a salary which is offset against their loan.

Profit washing scheme using a trust and a loss entity (taxpayer alert 2008/15)

These schemes are designed to offset trading profits in a trust against tax losses in an unrelated company in an attempt to reduce tax payable on the trading profits.

Liquidation of entities to avoid the payment of tax liability (taxpayer alert 2008/16)

These schemes attempt to evade the tax and penalties from tax avoidance by liquidating the companies and trusts involved. They may include Phoenix arrangements. Criminal charges may apply to people who participate in these schemes.
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Taxpayers warned of four abusive tax schemes

Simon Hampel Founder Staff Member

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Taxpayers warned of four abusive tax schemes

Simon Hampel Founder Staff Member

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