The Australian Tax Office (ATO) is warning small business owners to be wary of unlawful tax schemes offering to significantly reduce or avoid a tax bill.
The ATO has seen a rise in tax avoidance schemes being promoted online, particularly via social media. These schemes can entice honest people into arrangements that can have a significant impact on their business, such as the need to pay back incorrect tax refunds received and other financial penalties.
What is an unlawful tax avoidance scheme?
Unlawful tax avoidance schemes promote tax benefits that legally aren’t available. In some instances, tax advisers may inappropriately claim the schemes are supported by recent ATO rulings or look to exploit changes in the law.
This can include:
Tax avoidance: claiming tax deductions you aren’t entitled to.
Tax evasion: knowingly providing false and/or misleading information to the ATO. This could include hiding income or fraudulent activities aimed at reducing or eliminating your tax liability.
Superannuation: encouraging early access to superannuation benefits before a condition of release is met.
How are these schemes promoted?
It can differ. Some schemes may be marketed on mass via social media. Other schemes may be tailored to specific personal circumstances (such as people planning for retirement) and promoted to large private groups.
How to avoid unlawful tax avoidance schemes
The ATO’s advice for small business owners is to:
- 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 professional before committing.
- If you've unintentionally landed in an unlawful scheme, contact the ATO immediately. Approaching the ATO may make you eligible for a reduction in any penalties.
More information
- Visit the ATO website for information on tax avoidance schemes to watch out for and how to report unlawful tax schemes and promoters.
- Discover the quick check you can do to ensure your tax professional is registered.
