1. Super Scheme Smart An initiative to educate you about the dangers of retirement planning schemes, what to look out for and what to do if you believe your clients have fallen into or become involved in a risky scheme.

2. Before we get started, here is a video Q&A with the ATO Deputy Commissioner Michael Cranston. Super Scheme Smart: What is it?

3. Tax avoidance schemes: what’s the concern? Recently there has been an increase in schemes targeting individuals who are planning for retirement and their advisers. We refer to these as ‘Retirement Planning Schemes’. These schemes could lead to heavy penalties for individuals and promoters alike.

4. What is the ATO doing about it? Project Super Scheme Smart is designed to educate people about these worrying retirement planning schemes. Through Super Scheme Smart we are equipping those planning for their retirement and their advisors with the necessary information to make the best decisions. There are plenty of resources available online at www.ato.gov.au/superschemesmart including a handy information pack, videos, visuals and more.www.ato.gov.au/superschemesmart

5. What to look out for? Retirement planning schemes have some common features. They are usually: Aim to give a present day tax benefit by adopting the arrangement. Invariably they will sound ‘too good to be true’, and as such they most likely are. Designed to give the taxpayer minimal or zero tax, or even a tax refund. Artificially contrived with complex structures generally connected with the taxpayer’s existing or newly created self-managed superannuation fund (SMSF).

6. Current schemes of concern There are a number of schemes currently targeting Australians planning for retirement. Some current examples that are of concern to us are…

7. Dividend stripping Where the shareholders in a private company transfer ownership of their shares to an SMSF so that the company can pay dividends to the SMSF. The purpose being to strip profits from the company in a tax-free form.

8. Non-arm’s length limited recourse borrowing arrangements When an SMSF trustee undertakes limited recourse borrowing arrangements (LRBA) established or maintained on terms that are not consistent with an arm's length dealing.

9. Personal services income Where an individual (usually at pension phase) diverts income earned from personal services to a self-managed superannuation fund (SMSF) where it is concessionally taxed or treated as exempt from tax.

10. What are the consequences?

11. Financial penalties may apply, which will drain your clients’ retirement nest egg. Individuals may also lose their right to be a trustee of their own super fund. Promoters may face litigation under ‘Promoter Penalty Legislation’. Tax Agents found to be promoting these schemes may be referred to the Tax Practitioners Board.

12. How you can help? Handy tips

13. What you can do to help Alert the client: As soon as you suspect a client may be involved in a retirement planning scheme, or they’ve come to you for advice, let them know immediately and clearly explain the consequences. If in doubt, ask for a second opinion: Seek an independent second opinion from the ATO, a professional colleague or another trusted expert. Stronger together: Work cooperatively and communicate early about any retirement planning schemes that appear too good to be true so that the ATO can give you guidance and advice.

14. When informed early, the ATO is in a better position to minimise penalties, and allow taxpayers involved in these schemes to retain their capacity to manage their SMSF.

15. www.ato.gov.au/superschemesmart 1800 177 006 reportataxscheme@ato.gov.au Super Scheme Smart: if in doubt, check it out.