SLA's - The Tax Man Cometh!
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SLA's - The Tax Man Cometh!
Have just spoken to someone who has told me the ATO have classified yet another scheme that was apparently favoured by pilots/doctors/lawyers etc a Part IVa tax avoidance scheme and will be imposing stiff and hard penalties in the near future if not already.
This scheme is known as SLA's - substitute loan agreements (or something very similar).. .It was favoured by an organisation used by many pilots (who subsequently boasted of said individuals financial prowess of turning them into millionares in a short period) to invest their funds,super etc.. .This is how it apparently works.
Offshore companies that invest in shares in Australian registered companies on the share market are paid a dividend, and a tax imputation credit is a portion of that dividend.
Foreign nationals or offshore organisations are not allowed to utilise the tax imputation credit portion so here comes the scam.
Just before the dividend is announced the shares are transferred to an Australian individual who becomes the new registered owner of those shares and hence receives the share dividend and the tax imputation credit portion accordingly.
After a short period (a few days typically) the shares, plus dividend and a large portion of the tax imputation credits are returned offshore to the original investor,the middlemen (organiser of this scheme,stockbrokers and the individual whose name the shares were transferred into) get to keep a cut of the tax imputation credits - of which tax has already been paid effectively.
Because of the underhanded nature of this system the tax man is seeking a 100% return of all profits,plus a 100% penalty,plus 14% interest since about 1996 when this scam first surfaced.
I personally knew of one MEL based pilot boasting of holding some $5,000,000 worth of shares in a company that produced a 4% dividend.. .The tax imputation portion is about 30% of that figure so lets say $66,000.
What this means is that effectively the tax man will be wanting close to 4 times the original tax imputation credit amount returned to them.....OUCH!
Cheers guys and thought you just may be interested.
[ 02 February 2002: Message edited by: Dambuster ]</p>
This scheme is known as SLA's - substitute loan agreements (or something very similar).. .It was favoured by an organisation used by many pilots (who subsequently boasted of said individuals financial prowess of turning them into millionares in a short period) to invest their funds,super etc.. .This is how it apparently works.
Offshore companies that invest in shares in Australian registered companies on the share market are paid a dividend, and a tax imputation credit is a portion of that dividend.
Foreign nationals or offshore organisations are not allowed to utilise the tax imputation credit portion so here comes the scam.
Just before the dividend is announced the shares are transferred to an Australian individual who becomes the new registered owner of those shares and hence receives the share dividend and the tax imputation credit portion accordingly.
After a short period (a few days typically) the shares, plus dividend and a large portion of the tax imputation credits are returned offshore to the original investor,the middlemen (organiser of this scheme,stockbrokers and the individual whose name the shares were transferred into) get to keep a cut of the tax imputation credits - of which tax has already been paid effectively.
Because of the underhanded nature of this system the tax man is seeking a 100% return of all profits,plus a 100% penalty,plus 14% interest since about 1996 when this scam first surfaced.
I personally knew of one MEL based pilot boasting of holding some $5,000,000 worth of shares in a company that produced a 4% dividend.. .The tax imputation portion is about 30% of that figure so lets say $66,000.
What this means is that effectively the tax man will be wanting close to 4 times the original tax imputation credit amount returned to them.....OUCH!
Cheers guys and thought you just may be interested.
[ 02 February 2002: Message edited by: Dambuster ]</p>
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I have heard that the "Public Servants" who work in the ATO get paid bonuses on the extra tax that they collect from the suckers in these schemes. Does anyone know if this is true?
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Capt_Zoolander - the bonus scheme you speak of is true of a number of APAC countries, but not OZ. Too many checks and balances in place here which means any such payments quickly draw the attention of the auditors and internals affairs.
Here I have heard of instances in the ATO of the reverse occurring - tax officers hinting for "favours" to let people off - but this has been for very small fry - not real tax evasion stuff. Again - too many checks and balances.
In some Asian countries this practise is rife and is officially included as part of the "salary package" - "commissions" of up to 25% depending on the amount collected!!!
Here I have heard of instances in the ATO of the reverse occurring - tax officers hinting for "favours" to let people off - but this has been for very small fry - not real tax evasion stuff. Again - too many checks and balances.
In some Asian countries this practise is rife and is officially included as part of the "salary package" - "commissions" of up to 25% depending on the amount collected!!!
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I remember flying with a few guys who had been talked into this SLA "tax minimisation" scheme by the now infamous Sentinal mob. Sounded literally too good to be true at the time. Now I guess the piper will be paid, with of course no chance of any come-backs against the crooks from Sentinal. <img src="mad.gif" border="0">
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I was wondering about this as a few months ago on the channel nine today show I heard Alan Jones say in his segment that this was happening. I had also heard the same comment from other people over the last year including a few Pilots.
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Some years back a mate in QF MEL suggested I go to see this supposed "financial guru" about investing,tax etc.. .Well, I got the silver tea service,some very expensive scones and a ritzy hard sell about how many hundreds of thousands of dollars I should borrow against my very well managed and accrued super fund which he wanted to take over.
To add to this the abovementioned scheme was mentioned as an example (which did not apply to me as I paid tax offshore as a foreign resident) and some movie investment scheme which since has had the tax man doing backflips!!
To make matters worse when asked for an outline of his scheduled fees I was told something like "with the money I shall derive for you it's minimal and besides - its a tax deduction anyway".
What did I gather from all of this??. .As my old man used to say "He was as flash as a rat with a gold tooth!". .Having heard how this man ran peoples funds I am glad I walked and have left my superfund so to speak with thorough professionals with an outstanding track record.
The funds company mentioned by this individual in Melbourne is without a doubt one of the worst performing overall super funds from what I have read.. .To blindly put your hard earned funds with an individual that cant quote his fees or invest in a lack-lustre fund and/or being an active promoter of tax avoidance schemes smells like the proverbial rat.
I wonder how many more trusting individuals have been affected by this person?
To add to this the abovementioned scheme was mentioned as an example (which did not apply to me as I paid tax offshore as a foreign resident) and some movie investment scheme which since has had the tax man doing backflips!!
To make matters worse when asked for an outline of his scheduled fees I was told something like "with the money I shall derive for you it's minimal and besides - its a tax deduction anyway".
What did I gather from all of this??. .As my old man used to say "He was as flash as a rat with a gold tooth!". .Having heard how this man ran peoples funds I am glad I walked and have left my superfund so to speak with thorough professionals with an outstanding track record.
The funds company mentioned by this individual in Melbourne is without a doubt one of the worst performing overall super funds from what I have read.. .To blindly put your hard earned funds with an individual that cant quote his fees or invest in a lack-lustre fund and/or being an active promoter of tax avoidance schemes smells like the proverbial rat.
I wonder how many more trusting individuals have been affected by this person?
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Dambuster,
I think the correct name is 'securities lending arrangement'. I may be wrong though.
It was big business with JB some years ago in Melbourne, and Sentinel dabbled in it also.
There were quite a lot of pilots I knew who cleaned up, but their view may now change.
I remember being told by a solicitor a couple of years ago that the ATO had a test case up against a 'little old lady who would wither under the questioning of Mr. Jones QC (or whoever, QC) and thereby set a precedent for them to go after al who participated.'
If your report is factual, it looks as though the man cometh indeed!
I think the correct name is 'securities lending arrangement'. I may be wrong though.
It was big business with JB some years ago in Melbourne, and Sentinel dabbled in it also.
There were quite a lot of pilots I knew who cleaned up, but their view may now change.
I remember being told by a solicitor a couple of years ago that the ATO had a test case up against a 'little old lady who would wither under the questioning of Mr. Jones QC (or whoever, QC) and thereby set a precedent for them to go after al who participated.'
If your report is factual, it looks as though the man cometh indeed!
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Kaptain X - my apologies - I believe Securities Lending Arrangement is actually the correct term.
So what have we here now?
I know of some people that not only invested in SLA's but also the Sentinnel tax debacle!!
Looks like this time around not only will the tax man be going after the unfortunate fools that were talked into this totally and obviously dubious scheme but also those that promoted and participated (as middlemen).
I reackon some guys on this scheme alone are up for over $300-400,000 in back taxes!
So what have we here now?
I know of some people that not only invested in SLA's but also the Sentinnel tax debacle!!
Looks like this time around not only will the tax man be going after the unfortunate fools that were talked into this totally and obviously dubious scheme but also those that promoted and participated (as middlemen).
I reackon some guys on this scheme alone are up for over $300-400,000 in back taxes!
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Wow! that's a lottaloot.
I think the message here is don't get greedy, and if you're working a fiddle, keep quiet about it.
It's a bit like our schooldays. Never tell your mates you're humping that sheila in class, because when you do, not only does everybody else know, but you also get closed down.
I think the message here is don't get greedy, and if you're working a fiddle, keep quiet about it.
It's a bit like our schooldays. Never tell your mates you're humping that sheila in class, because when you do, not only does everybody else know, but you also get closed down.
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Yes 1013 I sat through the same sell session and these days section 849 of the securities act would have the gentleman in court. A salesman of no actual financial skill just a little luck in the early 90s and a good sales refferal line.
. .If we put the fan on High they won't smell the stink until they have signed...
. .If we put the fan on High they won't smell the stink until they have signed...
