Beware of Dodgy Tax Schemes: Protect Yourself from scam

As tax season approaches, we want to alert you to the rise of dodgy tax schemes being promoted online, particularly on social media. These schemes often promise huge tax reductions or complete tax avoidance, but they come with serious risks, including being scammed of your resources, and money or acquiring hefty penalties and legal consequences from the Taxation Office.

What Are Dodgy Tax Schemes?

Dodgy tax schemes are arrangements that claim to help you reduce or eliminate tax obligations through artificial, misleading, or illegal means. They often involve:

• Setting up a fake not-for-profit foundation to disguise personal income.

• Setting up a fake ABN and registering for GST when there is no true business operation.

• Investment scams claiming eligibility for tax offsets when they don’t qualify.

• Misusing trust structures to hide income or assets.

• Bogus deductions or false claims on tax returns.

These schemes may look legitimate, and some promoters even claim they have "ATO approval” but in reality, they are illegal and can result in serious consequences.

Why You Should Stay Away from Dodgy Tax Schemes

• Heavy Penalties: The Australian Taxation Office (ATO) imposes significant fines, sometimes amounting to millions of dollars, on those involved in illegal tax schemes.

• Reputation Damage: Engaging in tax avoidance could affect your financial, personal and business reputation.

• ATO Crackdowns: The ATO’s Tax Avoidance Taskforce is actively investigating and penalising those who participate in these schemes.

• Legal Consequences: Some schemes may lead to criminal prosecution, leading to severe penalties.

How to Protect Yourself

• Be sceptical: If an offer sounds too good to be true, it probably is a scam.

• Check with a Registered Tax Professional. Before entering any tax arrangement, consult with a licensed tax agent or CPA to ensure it's legitimate.

• Report Suspicious Offers: If you come across a questionable tax scheme, report it to the ATO or your trusted tax advisor.

• Stay Informed: Keep up with the ATO’s alerts and warnings about emerging tax schemes.

Honest taxpayers can sometimes be unknowingly caught up in unlawful tax schemes. If you are ever approached with a tax-saving strategy that seems unusual or aggressive, always seek professional advice first. Avoid the risk, protect your business, and stay compliant.

If you have any concerns about tax schemes or need trusted, compliant tax advice, feel free to contact us today!

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