This paper examines the effectiveness of anti-avoidance provisions in dealing with mass-marketed tax schemes.
In recent decades, mass-marketed tax schemes have been the subject of great attention by the Taxation Office, Federal Parliament, as well as investors, advisors and promoters of such schemes. The papers lists the several reasons for such attention, which include the negative effect such schemes are having on the Australian tax base, the method of financing involved, as well as increasing costs for administering such schemes. Further, in terms of the individual investors in these schemes, unexpected exposure to interest and penalties on any resulting unpaid tax has also been under the spotlight.
“Before we begin, it is important to define mass-marketed tax schemes. Unlike some other schemes that can be ascribed as “boutique”/ “one-off” arrangements tailored for high income or high wealth individuals and large corporate entities, mass-marketed tax schemes are more generic arrangements and products marketed widely to taxpayers from different economic backgrounds . Mass-marketed tax schemes include employee benefit trusts, agricultural schemes with round robin and limited recourse funding, and certain film schemes with guaranteed returns that are, in effect, a return of part of the invested funds.”