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ATO Probes Tax Abuse Of Employee Funds

by Mary Swire, Tax-News.com, Hong Kong

04 May 2007


Australian Tax Commissioner Michael D’Ascenzo has warned people to be cautious about entering into tax avoidance arrangements involving employee entitlement funds.

Under such an arrangement, the marketer of the scheme sets up an employee entitlement fund in Australia or another country on behalf of an employer, promising they will regain access to any contributions made to the fund.

The employer then makes contributions to the fund alleging that the amounts will be set aside to meet future employee entitlements. They then claim a deduction from the Tax Office for the contributions.

However, the scheme marketer then returns the funds to the employer via other parties.

By entering into such arrangements people may be claiming deductions they are not entitled to.

“Taxpayers should be cautious of any approaches or offers to enter into such arrangements and seek independent tax and legal advice," D’Ascenzo said.


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