The ATO has launched a new initiative aimed at educating individuals about the potential pitfalls of ‘retirement planning schemes’. The project is called ‘Super Scheme Smart’, and has been created to keep you safe from risking your hard earned retirement nest egg.
As proposed by the ATO, individuals with the highest risk are those approaching retirement, including individuals aged 50 or over, who are looking to invest significant amounts of money into retirement. This is particularly relevant for SMSF trustees, self-funded retirees, company directors, small business owners, and individuals involved in property investment.
While retirement planning schemes can vary, there are some common features that people should be aware of. Usually these schemes:
- are artificially contrived and complex, usually connected with a SMSF
- involve a lot of paper shuffling
- are designed to leave the taxpayer with minimal or zero tax, or even a tax refund
- aim to give a present day tax benefit by adopting the arrangement.
Individuals caught using an illegal scheme identified by the ATO may incur severe penalties under tax laws. This includes risking the loss of their retirement savings as well as their rights as a trustee to operate and manage a SMSF:
“Retirement planning makes good sense provided it is carried out within the tax and superannuation laws. Make sure you are receiving ethical professional advice when undertaking retirement planning, and if in doubt, seek a second opinion from an independent, trusted and reputable expert”.
For more information about the specific schemes, you can visit their website at www.ato.gov.au/superschemesmart.