ATO Cracks Down on Tax-Dodging Retirement Funds
July 28, 2016 Taxation in Australia
CANBERRA – Taxpayers and tax advisers in Australia are being told to stop using self-managed retirement funds to evade taxes.
The Australian tax Office is cracking down on tax evasion committed via self-managed superannuation funds.
Under current regulations in Australia, taxpayers saving for retirement are able to manage their own retirement savings account via self-managed superannuation funds.
The ATO claims that a growing number of tax advisers are now helping individuals bypass their tax obligations by abusing the SMSF schemes.
Specifically, the ATO says that tax are being dodged by dividend stripping, Non-arm’s length limited recourse borrowing arrangements, and by shifting personal service incomes to an SMSF.
Taxpayers who are found to be using an illegitimate SMSF scheme to evade their tax obligations face the risk of prosecution, and a loss of their retirement savings.
Further, advisers who helped taxpayers establish such an illegitimate fund will face the penalty of being a promoter of such a scheme.
The ATO suggested that the best way forward for any taxpayers who are using such a scheme or for an adviser using such a scheme would be to cooperate with tax authorities to fix the problem.
Photo By: Martin Howard