The ATO has encouraged self-managed retirees to expose dodgy SMSF practitioners that are pushing illegal tax schemes and giving the industry a poor reputation. After identifying a significant number of retirement planning schemes that were created purely to help people avoid tax as opposed to providing retirement benefits, the ATO is looking to close down the schemes with the help of SMSF retirees.
The Deputy Commissioner Michael Cranston has joined forces with trustees who have fallen victim in the rogue schemes in an effort to work together to shut down dodgy schemes and put an end to schemes that pose a risk for retirees and their retirement savings.
The schemes are usually contrived in nature and while connected with an SMSF, usually involve a significant amount of 'paper shuffling' to leave the taxpayer with 'minimal or zero tax'. Individuals who are caught using an illegal scheme run the risk of losing their retirement funds and also may lose the right to manage and operate an SMSF. With SMSF's now taking up almost one third of the super system, the ATO is cracking down on malpractice to ensure the schemes are properly run and meet industry best practice.
The ATO is also concerned about 'dividend stripping', where members of SMSFs claim franking credit benefits by transferring dividends from shares in private companies through their SMSF, enabling income to be paid into an SMSF as a 'tax-free' pension.
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