The Minister for Financial Services & Regulation, Joe Hockey, has responded to calls by Liberal Kalgoorlie MP, Barry Haase, and has asked the Australian Securities and Investments Commission (ASIC) to maintain its vigilance in stamping out misleading and deceptive practices in the promotion of so called tax effective schemes.
"Barry Haase has brought to my attention the problems of people in WA who have invested in these tax schemes" the Minister said.
"Many of the investors having difficulties with these schemes say they were given misleading advice by promoters and advisers.
There has been a lot of public concern with these schemes, mainly because the tax benefits have not lived up to the bold claims of their promoters."
The Corporations Law prohibits the inclusion of false or misleading statements in prospectuses or the making of false or misleading statements by financial advisers.
The Minister noted that ASIC had already taken a range of actions in relation to tax effective schemes including:
- legal action against fraudulent promoters;
- requiring schemes to be wound up and investors money refunded;
- requiring prospectuses to be amended or replaced, for example, if the projected returns are based on assumptions that are completely hypothetical; and
- refusing securities dealers licences to the promoters of the schemes, or revoking licences where ASIC standards are not met.
The Minister urged investors to check statements made about the benefits of schemes carefully and consider seeking independent professional advice before investing.
This includes examining closely any qualifications as to whether tax deductions will be available, and the assumptions underlying statements about the returns on the scheme.
Investors who think that they have been misled should contact the ASIC InfoLine on 1300 300 630.
All inquiries relating to the taxation treatment of these schemes should continue to be directed to the Australian Taxation Office.
"ASIC has assured me that it will continue to take action wherever possible to protect investors in these schemes", the Minister said.