Have you ever received tax advice, or been shown tax schemes that sounded too good to be true? It might be an illegal tax scheme. A tax scheme could involve complicated deals, change the way money is used to avoid paying taxes, or make false claims for refunds. It might also set up deals to:
- Wrongly declare income as “capital”
- Take advantage of lower tax rates
- Hide where money comes from, or how parties are connected
- Take out retirement funds early
- Move money through different groups, like a bunch of trusts, to avoid or lower taxes that should be paid.
People who promote illegal tax schemes might target small businesses, and it could end up costing you more than just your money. You might also have to pay back taxes, plus interest and fines. Most tax advisors give good advice to their clients. But some advisors might promote illegal tax schemes that seem too good to be true. They’re only looking out for themselves. Promoters of tax schemes could be from different jobs, like accountants, lawyers, financial planners, and consultants.
Be careful of signs that someone might be promoting a scheme, and watch out for advisors who:
- Promise there’s no risk in their product
- Tell you to keep quiet about the deal, to beat out other firms
- Charge a fee based on how much tax they save you
- Don’t want you to get advice from someone else
- Don’t have official documents for their product
- Suggest illegal activities like “phoenixing” or shutting down key companies.
Before you agree to any tax deal, make sure it’s legal. If you think someone is promoting a tax scheme, you can let the ATO know, without saying who you are. If you are unsure of anything relating to tax schemes, or want to learn more about this topic, please feel free to contact us.
More about illegal tax schemes.