The Australian Taxation Office (ATO) has issued a crackdown on those who promote risky retirement planning schemes in a bid to protect retirement funds.
The ATO has launched Project Super Scheme Smart to help financial planners, accountants and other advisers identify, avoid, and report tax avoidance schemes.
In particular, the ATO was targeting dividend stripping, where shareholders in a private company transferred share ownership to a self-managed superannuation fund so companies could pay dividends to the SMSF in a tax-free environment.
It was also focusing on non-arm’s length limited recourse borrowing arrangements, where an SMSF trustee implements LRBAs set up or maintained on terms not consistent with an arm’s length dealing, and personal service income, where an individual, usually, at pension phase, shifts income earned from personal services to an SMSF where it is concessionally taxed or tax-exempt.
Financial planners and accountants who promoted retirement planning schemes to their clients could face promoter penalty laws, and punishment including prosecution.
ATO deputy commissioner, Michael Cranston, said they particularly had a role in helping clients steer clear of these schemes as they depended heavily on professional advice to manage their retirement planning.
“Unfortunately, promoters of these risky schemes are aware of the role that advisers play at this critical time and are targeting them to get their assistance in recommending schemes to clients,” Cranston said.
Those aged 50 or over who were approaching retirement and wanted to place large amounts of money into retirement were most at risk, particularly self-managed superannuation fund (SMSF) trustees, self-funded retirees, small business owners, company directors, and those involved in property investment.
“The ATO wants to play its part in ensuring soon-to-be retiring taxpayers protect their nest eggs.
“In order to put a stop to these schemes, we are encouraging people to come forward if they believe they are at risk, are already involved in a scheme or believe their clients are,” Cranston said.
