Too good to be true tax savings

There are many wise sayings when it comes to managing money, such as ‘If it looks too good to be true then it probably is’.

In tax circles, we often look at investment opportunities identified by clients and ask: ‘Does this proposal stack up without the associated tax savings?’

That may sound odd coming from a tax adviser, but our approach acknowledges that tax savings shouldn’t be the most important factor when developing an investment strategy.

Investments which rely heavily on beneficial tax outcomes also attract ATO scrutiny. Those who design such investments will therefore often seek an ATO Product Ruling in advance to help potential investors understand the associated tax issues. But it’s very important to understand that the ATO does not endorse an investment by issuing a Product Ruling: the ruling simply sets out the ATO’s opinion on the tax ramifications for those who do invest.

As an investor, focus on the commercial viability of the project. For more information talk to us for an independent second opinion

Cristy Houghton