Tax man targets super scammers

CUTTING tax is appealing to everybody, but if you listen to the latest wave of superannuation spruikers you are asking for trouble.

The ATO says if a scheme looks too good to be true it probably is.

“AGGRESSIVE” superannuation schemes that promote ways for pre-retirees to dodge tax on their nest eggs are being targeted by the Australian Taxation Office.

Over-50s and people with self-managed super funds are in the sights of a new wave of super spruikers who have followed the footsteps of property spruikers by promising unrealistic benefits.

They often promote activities such as dividend stripping, illegal borrowing arrangements and illegal income diversion. However, the price of following their advice can be as harsh as losing almost all of your nest egg in penalty taxes and other fines.

Launching a new ATO campaign to stop the scammers, ATO assistant commissioner Michael Cranston says several “aggressive” schemes have been operating in the past 18 months.

“We are seeing pockets of them popping up. We are really worried about the schemes that get promoted — often the people who get involved can really get hurt,” he says.

Cranston says older Australians spend years saving for retirement and “when things go wrong later on it’s very hard to rebuild”.

He says spruikers will approach pre-retirees or their accountants and “make it all look pretty good”.

Getting high-quality professional advice is the best insurance against fraudsters says SMSF Association head Andrea Slattery.

“We’re trying to stop the scams dead, before they grow.”

The ATO’s new Super Scheme Smart program includes a new website, information packs and videos, and sending out taxpayer alerts about the schemes it spots. It wants people to report tax avoidance schemes confidentially by calling 1800 177 006 or emailing [e-mail].

There are plenty of legal ways to use the tax rules to improve your retirement savings. The ATO says the illegal ones often have common features such as being contrived and complex, involving a lot of paper shuffling, and appear designed to leave you with zero tax payable or even a refund.

“If it looks too good to be true, it probably is,” Cranston says.

The SMSF Association has welcomed the ATO move and managing director Andrea Slattery says it should help protect people from fraudulent advice and “inappropriate tax schemes”.

“The overwhelming majority of advisers in the financial services sector play by the rules, but sadly there is a minority element of spruikers that prey on the vulnerable by offering them risky schemes,” she says.

“Getting high-quality professional advice is the best insurance to ensure individuals and SMSF trustees avoid becoming a victim of fraudulent behaviour.”