What Are The Most Common Tax Evasion Penalties?

Tax evasion is a serious criminal offence and can come with harsh consequences.

Tax evasion penalties can range from a good behaviour bond to long-term imprisonment, so it’s important to take any charges or allegations of tax evasion seriously.

Always speak to a criminal defence lawyer who is experienced in taxation law and has a proven track record of getting good outcomes for clients who are facing tax fraud charges.

What is tax evasion?

Tax evasion, also known as tax fraud, is when a person or group deliberately withholds information or provides false or misleading information to the Australian Tax Office (ATO) in order to avoid paying tax or to pay less tax than they are obliged to pay.

Tax evasion can be carried out on a domestic scale, or by making use of overseas jurisdictions to conceal money and assets.

Tax evasion is considered a serious crime, especially if it is carried out on a widespread scale over a period of time.

Earlier this year, the ATO announced it would be cracking down on offshore tax evasion, and has granted an amnesty until the end of this year for individuals and corporations who have not declared overseas assets and income to declare them.

As long as assets and income from offshore ‘tax havens’ are declared by the end of the calendar year, the ATO has stated that it will not take further action.

It is expected that with the increased sophistication of technology and a global approach across different countries, tax havens and overseas tax fraud will have less chance of going unnoticed in the future.

This may mean that anybody who is charged with tax evasion and who hasn’t declared their overseas assets this year could find themselves facing criminal charges.

In 2006, the Australian Government set up Project Wickenby, a task force dedicated to reducing tax evasion and avoidance.

This project has so far resulted in 45 convictions and the collection of more than $500 million in undeclared tax revenue.

A number of people have been sentenced to jail as a result of investigations undertaken by the task force in recent years.

What are the criminal charges for tax evasion?

There are two different charges that are generally used in cases of tax evasion:

1. Obtaining a financial advantage by deception.

This is a Commonwealth offence under Section 134.2(1) of the Criminal Code Act.

To be found guilty of obtaining a financial advantage by deception the prosecution needs to prove that you obtained a financial advantage for yourself or for another person, or that you induced a third party to obtain a financial advantage or to keep a financial advantage that you had.

The deception has to be considered reckless or deliberate, a genuine mistake is not enough.

2. Conspiracy to defraud.

This offence under Section 135.4 of the Criminal Code Act is used when two or more people are charged with working together to defraud a Commonwealth organisation (in this case the ATO).

What are the most common penalties for tax evasion?

Both of these offences come with a maximum penalty of ten years’ imprisonment and there have been a number of cases in recent years that have resulted in prison sentences for those convicted.

Last year, a registered accountant was sentenced to four years in jail for tax fraud committed between 2004 and 2005 during which she falsely submitted BAS statements and had the refunds paid into bank accounts in her name.

In another case last year, a Sydney couple were sentenced to a jail term of two and a half years after they were found guilty of participating in an income tax fraud scheme.

This conviction was a result of Project Wickenby investigations, and involved the couple making false income tax deductions through an overseas marketing company.

The couple claimed they had been drafted into the scheme through their accountant, who had previously been sentenced to five years’ imprisonment for setting up the scheme for herself and her clients.

In some cases, tax fraud can also be linked to other types of fraud, including proceeds of crime or money laundering offences.

This can lead to further penalties depending on the nature of the additional charges.

If you have been charged with tax evasion or fraud, or if you believe you are under investigation, make sure you seek experienced legal advice from an expert criminal defence lawyer.

Tax fraud can be a complicated field of law and one that can lead to serious penalties and imprisonment.

However, with early help from a good lawyer you may be able prevent charges from being brought against you in the first place.

If you are charged, an experienced defence lawyer may be able to beat the charges altogether or, if you wish to plead guilty, to minimise the damage caused by helping you to avoid a harsh penalty.