You may be offered investments that promise large tax refunds, or arrangements that put your money in an offshore tax haven.
It can sometimes be hard to tell a good investment from a bad one. Promoters can come with convincing sales pitches, and it can be difficult to tell if you’re getting sound advice. It can be confusing, with promoters offering you big tax deductions, especially towards the end of the financial year.
Before you commit to any investment, get independent advice to make sure the investment is sound, including any claimed tax benefits. This is important because our tax system is based on self-assessment and you are responsible for your tax return, even if it is prepared by your tax agent.
If you invest in a dodgy investment scheme, you could be left with the tax bill long after the promoter and your money are gone. If you don't investigate before you invest, you're risking your hard-earned money, and you might have to pay back any missing tax, plus interest and penalties.
Does the salesperson work for a licensed business?
People who offer financial products and advice must work for a business that holds an Australian financial service licence, issued by the Australian Securities and Investments Commission (ASIC). You can check licence details free at www.fido.gov.au or by calling ASIC’s Infoline1300 300 630.
Does the investment have a product disclosure statement or a prospectus?
As a potential investor, by law, you must be given either a product disclosure statement or a prospectus. Contact ASIC at firstname.lastname@example.org or phone 1300 300 630 if you don't get a current product disclosure statement or prospectus.
Have I got an independent second opinion on the investment scheme?
Before you sign anything, get independent advice about the investment from an adviser who has no connection with the seller or the investment scheme.
Have I checked with the Tax Office to make sure the arrangement has a product ruling?
Many tax effective investments have a Tax Office product ruling. A product ruling provides you with legally binding assurance that the tax deductions set out in the ruling will be available provided the scheme is carried out as described in the product ruling. Call us or an independent tax adviser to find out if the scheme has a ruling.
You can find out more about our product rulings at ato.gov.au or by calling 1800 177 006, or you can ask an independent tax adviser.
The Australian Securities and Investments Commission also posts warnings about known dodgy investments on fido.gov.au and investigates unlicensed financial advisers.
For more information about offshore arrangements, you can find the booklet Tax havens and tax administration (NAT 10567) at www.ato.gov.au
If you have been offered a dodgy investment scheme, you can tell us about it anonymously by calling 1800 060 062.
When you are making important decisions about your money – whether it's taking out a loan, buying a house or deciding on a super fund – it can be hard to know where to start.
One of the best places you can go is the Australian Securities and Investments Commission (ASIC) consumer website FIDO at www.fido.gov.au
Ask FIDO for information about investing and about all sorts of financial products and services. It doesn't matter whether you are starting small or planning an investment strategy for the rest of your life. The issues you need to consider will fundamentally be the same.
FIDO can help you:
develop your financial strategy
develop your own ground rules for investing so you can stay in control
avoid the latest scams and dodgy sales practices
decide whether you should borrow to invest
decide which tax and social security issues you need to consider, and