18 Oct 10 TA 2010/4 - tax schemes in Samoa to claim purported deductions and conceal income or assets
On 14 October 2010, the ATO issued Taxpayer Alert TA 2010/4, entitled "Australian resident entities using promoted tax schemes in Samoa to claim purported deductions and conceal income or assets". The ATO says that it is investigating arrangements covered by this Alert as part of the whole of government Project Wickenby.
The arrangement is described as follows:
"An Australian resident taxpayer (the taxpayer) enters into an arrangement with a tax scheme promoter involving the use of offshore entities and structures in Samoa or other low tax jurisdictions. The arrangement involves the transfer of funds offshore as artificial expenses for services purportedly provided by the promoter or an associated offshore entity."
The arrangement may be used for two purposes:
- To generate deductions;
- To conceal receipt of income or ownership of assets.
The ATO has reviewed the arrangement and considers it is ineffective.
In media release No 2010/30, issued on 14 October 2010, the ATO warned people about the bogus Samoan offshore tax schemes being used to underpay taxes.