ATO flags warning on retirement schemes



Financial planners and accountants who are found to have promoted retirement planning schemes to their clients could face promoter penalty laws, and punishment including prosecution, the Australian Taxation Office (ATO) warned.
The ATO signalled that schemes like dividend stripping, where shareholders in a private company transferred shares to a self-managed superannuation fund (SMSF) to move profits into a tax-free environment would not be acceptable.
Others schemes that were unacceptable included:
- Non-arm's length limited recourse borrowing arrangements — when an SMSF trustee implements LRBAs set up or maintained on terms not consistent with an arm's length dealing;
- Personal service income — when an individual, usually, at pension phase, shifts income earned from personal services to an SMSF where it is concessionally taxed or tax-exempt.
The ATO launched project ‘Super Scheme Smart', as it recently saw a spate of schemes designed particularly to target those nearing retirement.
These schemes were particularly evident in the self-managed superannuation fund (SMSF) space, where accountant advice was more heavily represented.
The ATO said those aged 50 or over who were approaching retirement and wanted to place large amounts of money into retirement were most at risk, particularly SMSF trustees, self-funded retirees, small business owners, company directors, and those involved in property investment.
The project formed a part of the ATO's broader focus on tax avoidance schemes.
ATO deputy commissioner, Michael Cranston, said clients depended heavily on the advice of financial planners and accountants to manage their retirement planning.
"Unfortunately, promoters of these risky schemes are aware of the role that advisers play at this critical time and are targeting them to get their assistance in recommending schemes to clients," Cranston said.
"In order to put a stop to these schemes, we are encouraging people to come forward if they believe they are at risk, are already involved in a scheme or believe their clients are," Cranston said.
"As a trusted adviser, you may be the first port of call in identifying a problem. The best defence is working together cooperatively. We have plenty of resources available on the Super Scheme Smart website."
Recommended for you
The corporate regulator has cancelled the AFSL of a Perth advice firm with the firm having previously seen its licence temporarily suspended in 2020.
Having proposed changes earlier this year, ASIC has clarified how it will support licensees with additional relief under the reportable situations regime.
AMP has partnered with BlackRock and research house Lonsec to provide a model portfolio capability on its North platform that offers “portfolio customisation at scale” to advice practices of all sizes.
Money Management rounds up actions ASIC took against advice individuals in the first half for FY25 from exam falsifications to dishonest conduct.