25 June 2013 Tax planning arrangements – getting it right

You're entitled to minimise the amount of tax you pay through legal tax planning arrangements. For example, through a negatively geared investment property that complies with tax law. However, there are some arrangements that take things further and these are known as 'tax avoidance schemes'.

Even experienced investors can sometimes get caught up in tax avoidance schemes that are 'dressed up' to look like legitimate arrangements. It can be really difficult to tell the difference.

Fortunately, there is plenty of information to help you recognise tax schemes and avoid getting involved in one.

For a start, there's the ATO's guide Investigating tax-effective arrangements. An updated version has recently been released containing information on what you should do before you commit to a tax planning arrangement. This includes seeking independent advice from someone qualified who is not involved with promoting or selling the arrangement.

The guide outlines what to look out for when you're considering a tax planning arrangement, including some less obvious features of tax avoidance schemes. It lists a number of common schemes and provides plain language explanations and case studies. And, in the event you do get caught up in a tax scheme, the guide lets you know what you should do.

The ATO has also produced a YouTube video, presented by respected financial commentator Paul Clitheroe. In Recognising tax avoidance schemes Paul provides some valuable tips that you can use to spot a tax scheme.

As well as YouTube, the ATO uses other social media channels to relay important messages and provide links to further information. You can find them on:

  • Twitter (ato.gov.au)
  • Facebook (Australian Taxation Office)
  • YouTube (AusTax Office)

For more information, visit the ATO website

The link to the Paul Clitheroe video is no longer available as at 7 February 2020.

Reproduced in full with permission: Australian Taxation Office Tax planning arrangements – getting it right 5 June 2013

Attention: This article is intended to provide general information only. Every attempt has been made to ensure the accuracy of this information at the date of publication. The opinions expressed in this article do not reflect those of DHA, its staff or agents. Property prices are subject to fluctuation. Prospective investors should seek independent advice. DHA will not be liable for any loss, damage, cost or expenses incurred or arising by reason of any person relying on information in this article.