The ruling was published in the final tax determination on the early stage investor tax offset scheme.
The Australian Taxation Office (ATO) has confirmed that the anti-avoidance provisions in the Income Tax Assessment Act 1936 can apply to the early stage investor tax offset scheme, potentially cancelling any tax benefit received by participants.
The ruling was published in the final tax determination on the early stage investor tax offset scheme.
ATO’s view applies to taxpayers involved in this scheme before, during and after the date of the final determination. It’s likely participants will have to pay back any offset claimed. Penalties and interest may also apply.Tax professionals are encouraged to advise clients against getting involved. If a client has already invested, encourage them to contact us for help. If they proactively approach ATO, they may be eligible for a reduction in any penalties.Advisers found to be promoting this scheme could face serious consequences through the Promoter Penalty Laws. Registered tax agents may be referred to the Tax Practitioners Board to assess if there’s been a breach of the Tax Agent Services Act 2009.
This decision follows a taxpayer alert from December 2024, which warned against circular financing arrangements intended to artificially satisfy the requirements for claiming the maximum offset.
