The Australian Taxation Office (ATO) is warning self-managed superannuation fund (SMSF) trustees and retirees about the risks of some emerging retirement planning arrangements that they may consider, or be approached about.

ATO Deputy Commissioner James O'Halloran said the ATO knows most people do the right thing and work hard to save for their retirement.

"If a taxpayer becomes involved in any illegal arrangement, even by accident, they may incur severe penalties, jeopardise their retirement savings and risk losing their rights as a trustee to manage their own fund.  For this reason, today we are releasing further information on these arrangements through our Super Scheme Smart program."

Super Scheme Smart is designed to give taxpayers access to relevant case studies and information packs to ensure they are well-informed about illegal arrangements, explain the significant risks associated with those arrangements, what warning signs to look for and where to go for help.

Mr O'Halloran said, "We are working hard to shut down illegal arrangements quickly, but the best defence for taxpayers and their advisers is to be aware. Promoters of the arrangements may overtly target SMSF trustees and self-funded retirees, including small business owners and those involved in property development with significant assets."

"The arrangements may be cleverly disguised to look legitimate, involve a lot of paper shuffling and framed as being designed to give a taxpayer a minimal or zero amount of tax or even a tax refund or concession" Mr O'Halloran said.

"Just because an arrangement is structured in a way which appears to satisfy certain regulatory rules does not mean it is legal. Such arrangements can put SMSFs at significant risk of breaching the superannuation regulatory rules as well as the taxation law."

The ATO has previously raised concerns about dividend stripping arrangements and contrived arrangements involving diversion of personal services income to an SMSF.

There are some emerging arrangements the ATO also wants to bring to people's attention, including:

- Artificial arrangements involving SMSFs and related-party property development ventures.

- Arrangements where an individual or related entity grants a legal life interest over a commercial property to an SMSF. This results in the rental income from the property being diverted to the SMSF and taxed at lower rates whilst the individual or related entity retains legal ownership of the property.

- Arrangements where individuals (including SMSF members) deliberately exceed their non-concessional contributions cap to manipulate the taxable component and non-taxable component of their fund balance upon refund of the excess.

Mr O'Halloran said "Remember, if it looks too good to be true, it usually is."

If you are concerned about the legality of an arrangement do not hesitate to contact us before entering into a venture. 

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