Consumers should take care before investing in end of financial year tax schemes, the Minister for Financial Services & Regulation, Joe Hockey, warned today.
"Many schemes are quite legitimate, but there are unscrupulous operators who promise big returns and big tax deductions, but fail to deliver on their promises," the Minister said.
The Australian Securities and Investments Commission offers advice to investors on its consumer website, www.fido.asic.gov.au.
ASIC warns that many schemes advertised as reducing a tax bill will fail. While lower taxes may be payable in the first year, savings might be lost a few years later.
Investors should make sure:
- Your adviser is licensed. This can be done by checking the ASIC website www.asic.gov.au.
- That the scheme operator is licensed.
- A prospectus has been lodged for the scheme. This can be checked on the ASIC site.
- The scheme has a product ruling from the Australian Taxation Office. The ruling must relate to the particular scheme being operated, and still be current.
Danger signs are:
- Promised returns that seem unusually high
- Schemes that involve borrowing arrangements such as non-recourse loans
- Agricultural schemes that are to be undertaken on leased land
- High-pressure sales tactics.
Recent cases
24 May 2001 - ASIC laid misleading statement charges against the promoters of a WA bluegum plantation scheme. About $4m was raised from investors in the mining town of Moranbah in North-East Queensland.
20 March 2001 Colin Roderick McAskill was charged with 38 counts relating to ostrich, beef and educational tax schemes.