The Australian Taxation Office (ATO) has launched the Super Scheme Smart program to help protect self managed superannuation fund (SMSF) trustees from risky retirement plan arrangements.
The program would increase awareness in SMSF trustees and retirees about identifying and getting assistance regarding risky and illegitimate retirement plans.
Super Scheme Smart would give users relevant case studies and information packs. It would help educate taxpayers about illegal arrangements and the risks associated with them, what warning signs to look for, and where to seek help.
ATO deputy commissioner, James O’Halloran warned that risky retirement proposals can take a variety of forms.
“The arrangements may be cleverly designed to look legitimate, involve a lot of paper shuffling and framed as being designed to give a taxpayer a minimal or zero amount of tax or even a tax refund or concession,” O’Halloran said.
Examples of possible illegitimate risky retirement plans include arrangements that involve stripping dividends, diverting personal services income to an SMSF, granting legal life interests over commercial property to an SMSF, and artificial arrangements involving SMSDs and related-party property development ventures.
Entering such a scheme, even if an individual is unaware of its illegitimacy, could have negative consequences for SMSF trustees.
“If a taxpayer becomes involved in any illegal arrangement, even by accident, they may incur severe penalties, jeopardise their retirement savings and risk losing their rights as a trustee to manage their own fund,” O’Halloran said.
“We are working hard to shut down illegal arrangements quickly, but the best defence for taxpayers and their advisers is to be aware.”
The SMSF Association today confirmed its support for the Australian Taxation Office’s Super Scheme Smart material.
SMSF Association chief executive, John Maroney said the material, which also aims to educate SMSF trustees around avoiding paying illegal tax on superannuation income, was a positive step.
“We are highly supportive of the clarity that the ATO material provides on issues and risk areas that are causing concern for SMSF advisers and trustees alike,” he said.
Maroney said the initiative would continue to build awareness which in turn would work to curb illegal happenings within the wider sector.