The Australian Taxation Office (ATO) has offered a helping hand to financial planners to help prevent them and, more importantly, their clients from falling prey to aggressive tax-planning (ATP) schemes.
The ATO says it is “important to be aware of aggressive tax planning schemes when providing advice”.
“These schemes are set up to deliberately exploit the taxation system, can often be illegal, and present a clear risk to your clients’ finances and businesses,” it says.
It has invited financial planners who encounter such schemes to report them to the ATO. It says common warning signs of ATP schemes include:
- Lack of proper documentation, or advice that discourages seeking a second opinion
- Financing arrangements that are too good to be true, including: promises of zero-risk; loans that don’t have to be repaid; overly complex financing arrangements; and funding provided by the promoter
- Complex structures designed to hide, disguise, or improperly redirect income, expenses, or deductions.
“As a financial adviser, it is important to know what to look out for to help you best serve your clients, as well as protect your own reputation,” the ATO says.
“Being able to identify these schemes early will help to discourage your clients getting caught up in them before any damage is done.”
The ATO says it is seeking to support financial planners to help them recognise and deal with ATP schemes by providing information on:
- The risks that ATP arrangements pose to planners and clients
- Discussing ATP arrangements with clients
- Common ATP features
- The latest tax schemes the ATO is seeing in the community
- A single point of contact in the ATO when seeking further assistance.
The ATO says it will provide information to financial planners through key industry publications, and via its website.
“As guardians of significant investor wealth, we want to help financial planners to be scheme-wise,” the ATO says. “If it looks too good to be true, it probably is.”
The ATO says suspicious tax planning schemes can be reported to it by phone on 1800 177 006, using its smart phone app, or by email.
The ATO also plans to run a webinar for financial planners later in the year.
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