Contingency Fees: The Hidden Risk Behind “Too-Good-To-Be-True” Tax Refunds

Big refund. No upfront fee. Just a percentage when the money lands.

It sounds like a win-win—but in the world of tax, that kind of deal can come with serious strings attached.

The rise of “no win, no fee” tax advice

Most tax professionals do the right thing. They help people navigate complex rules, stay compliant, and avoid costly mistakes.

But there’s a growing pattern worth paying attention to: advisors who charge only a percentage of your refund—also known as contingency fees—and encourage claims that may not stack up.

Yes, this fee model is legal. But it can be a red flag. Why? Because when someone only gets paid if your refund is bigger, there’s a clear incentive to push the limits—or cross them.

And that’s exactly where the risk starts.

Aggressive tax planning isn’t clever—it’s dangerous

If your advisor is promising unusually large refunds, especially for past years, take a step back.

Here are some warning signs that should make you pause:

• Guaranteed tax savings (nothing in tax is ever guaranteed)

• Complicated structures with vague or unclear benefits

• Claims made without checking your documents or facts

• “Specialist” advice that isn’t tailored to your situation

• Pressure to act quickly

These tactics often go hand-in-hand with contingency fee arrangements—and they can put you directly in the firing line.

Because if a claim turns out to be wrong, it’s your name on the return.

What’s triggering scrutiny right now

Certain types of refund claims are drawing closer attention, particularly when driven by aggressive advisors:

• GST refunds: Some promoters claim they can unlock significantly higher GST refunds using rough estimates or questionable interpretations—sometimes going against established guidance.

• R&D tax incentives: Businesses are being approached (often out of the blue) with offers to claim research and development benefits, even when eligibility is unclear or poorly explained.

• Fuel tax credits: There’s been a push to revisit past claims, with some advisors encouraging inflated or unsupported adjustments—and even suggesting these won’t be reviewed.

  
  

  In reality, claims like these are far more likely to be audited, adjusted, and penalised.

The superannuation trap

One of the more concerning schemes involves accessing super early to fund personal property purchases through a self-managed super fund (SMSF).

Here’s how it typically plays out:

• You’re encouraged to set up an SMSF

• Your super is transferred and “invested”

• A large chunk is taken as fees

• The remaining money is paid out to you—illegally

If you don’t meet the legal conditions to access your super, this isn’t a loophole—it’s a breach.

And the consequences can be severe: penalties, tax bills, and long-term damage to your retirement savings.

Your responsibility doesn’t disappear

Even if you use a registered tax professional, you’re still responsible for what gets lodged under your name.

That means if something goes wrong—incorrect claims, inflated deductions, unsupported refunds—you could be required to:

• Repay the full amount

• Pay additional penalties

• Deal with ongoing scrutiny

In short, outsourcing your tax doesn’t outsource your accountability.

How to protect yourself

If something feels off, trust that instinct. Before acting on any tax advice:

• Ask for the basis behind the recommendation

• Check whether it aligns with official guidance or rulings

• Request examples or precedents where relevant

• Get a second opinion from another qualified professional

• Review all documentation carefully—don’t rely on assumptions

A legitimate advisor will have no problem walking you through their reasoning.

Our approach to fees

At Forbes Holland, your fee is always structured independently of your refund. That means our advice isn’t influenced by how large your refund might be—only by what’s accurate, compliant, and in your best interest. It’s a simple principle, but an important one: you should be able to trust that the guidance you’re receiving isn’t driven by a percentage.

The bottom line

A large refund can be appealing—but it should never come at the cost of compliance.

If a deal sounds too good to be true, especially one tied to a percentage-based fee, it’s worth asking a simple question:

Who’s really taking the risk here?

Because when it comes to tax, the answer is almost always—you.