The Australian Tax Office has launched a new initiative called Super Scheme Smart to help educate individuals about the pitfalls of certain retirement planning schemes and how to protect their retirement nest egg.
Each year the ATO discovers complex tax schemes and arrangements designed by promoters solely for the purpose of helping people avoid tax.
The office is currently seeing a number of schemes targeting Australians planning for their retirement. These schemes encourage individuals to channel money inappropriately through their self-managed superannuation fund (SMSF).
The penalties are substantial for those involved in deliberate tax avoidance schemes; an individual may well lose their right to be a trustee of their own super fund, or, in some cases, they could go to jail.
According to the ATO, individuals most at risk are those approaching retirement.
While the retirement planning schemes can vary, common features people should be aware of include schemes that:
– are artificially contrived with complex structures usually connecting with an existing or newly created SMSF
– involve a significant amount of paper shuffling
– are designed to give the taxpayer minimal or zero tax, or even a tax refund
– aim to give a present day tax benefit by adopting the arrangement
– invariably sound ‘too good to be true’, and as such they generally are