Australian resident entities creating false deductions and/or concealing income through arrangements with promoters based in Vanuatu.

An Australian resident taxpayer (the taxpayer) enters into an arrangement with a promoter located overseas which may involve a claim for deductions in relation to services purportedly provided or otherwise justify a flow of funds to entities located overseas. 2. The promoter or its associates then transfers the funds back to the taxpayer through the use of purported loan arrangements, or through the use of debit or credit cards; 3. The taxpayer may seek further deductions in respect of interest on the purported loan used to effectively repatriate the funds; 4. Alternatively, the foreign company may transfer the funds to a separate asset-holding structure (the structure) established in Vanuatu and controlled by the taxpayer or its associates. These funds are used to acquire assets to generate passive income, which is retained by the structure. The taxpayer and/or their associates ultimately reap the economic benefits for the structure, often in a disguised form; 5. The structure may also be used as a standalone arrangement to enable the taxpayer to hold assets offshore and conceal the income that is generated.