Potentially dodgy tax schemes are being promoted online and offered to people when they least expect it.
Individuals and businesses need to be wary of tax schemes promoted online (including via social media) promising to significantly reduce or avoid tax. Getting involved can attract heavy penalties.
The ATO’s website lists examples of tax schemes. Recently, there was one unlawful tax scheme encouraging people to dodge their taxes by setting up a purported not-for-profit foundation and organising their finances to look like their income belongs to it.
Another recent scheme offers would-be investors the opportunity to invest in a start-up that allegedly qualifies as an early-stage innovation company, to benefit from the associated tax offset. The ATO is concerned investors won’t qualify for this.
Such schemes have the potential to entice honest people who don’t fully understand what they’re getting into. Getting involved is risky.
Detecting and taking action on promoters of unlawful tax schemes is a priority for the Tax Avoidance Taskforce (TAT). A recent example of TAT action is the Federal Court handing down $13.6 million in penalties to research and development scheme promoters that were investigated.
Don’t fall for promoter tricks
- Do your research before making tax decisions – you’re ultimately responsible for your own taxes. Even if you get bad advice.
- For too-good-to-be-true offers, get early, independent advice from a registered tax practitioner. Contact us if you are unsure.
- If you’ve unintentionally landed in a scheme, contact us or the ATO immediately. You may be eligible for a reduction in any penalties.
Report schemes
Tax pays for many essential services and those involved in schemes are taking money away from the community. If you’re offered a suspicious tax scheme you should reject it and report it immediately.
Source: ato.gov.au January 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/businesses-and-organisations/small-business-newsroom/online-tax-schemes-on-the-rise
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