The Australian Taxation Office (ATO) has warned taxpayers to steer clear of tax avoidance schemes as they prepare to lodge their 2011 tax returns.

"It is at this time of year we see an increase in the number of tax avoidance schemes being promoted," Tax Commissioner Michael D'Ascenzo said.

"And I'm concerned that some people are getting involved in arrangements designed to deliberately avoid their tax obligations."

There are many different types of tax schemes; from publicly marketed arrangements, to specialist financial arrangements offered by experienced advisers.

"As appealing as an investment opportunity may sound, sometimes the promised tax benefits might not be consistent with the law," Mr D'Ascenzo explained.

If you're considering entering into an arrangement that will affect your tax liabilities-including shares, real estate or other financial products-it's important to carefully investigate and understand the tax consequences before making your investment decision.

Not getting the right information and advice can lead to a large tax debt, substantial penalties and in some cases even prosecution.

"Doing your research and seeking independent financial advice from someone not involved with the arrangement before investing is your best protection against promoters of tax avoidance schemes," Mr D'Ascenzo advised.

A good first step is our recently published guide for investors, Understanding tax-effective investments, which describes in easy-to-understand language some of the more common tax schemes and emerging arrangements that are often marketed to both individuals and small businesses. It also explains the consequences of making the wrong investment decision and provides information on what people can do if they've been caught up.

"Remember, if it's too good to be true, it probably is," Mr D'Ascenzo said.