Tax Fraud and Tax Evasion Lawyers Sydney

Tax fraud is the common name given to acts or omissions involving representations to the Australian Taxation Office (ATO) in order to obtain a gain for an individual, or a company or other business, to the detriment of the ATO.

These representations will often lead to payments being received to which a person, or a company or other business, is not entitled.

Tax evasion often involves under-reporting of income or over-reporting of expenditure, with a view to reducing tax liability.

Both of these categories of conduct are unlawful.

By contrast, tax minimisation or avoidance involves employing lawful methods to reduce taxation liability.

The main offences for prosecuting tax fraud, also known as tax evasion, are contained in the Criminal Code Act 1995 (Cth), which is a piece of legislation that applies across the nation.

Criminal Code Act 1995 (Cth)

Sections 134.1(1), 134.2(1) and 135.4(3) of the Criminal Code Act (the Act) contain most frequently prosecuted tax fraud and tax evasion offences, each of which carry a maximum penalty of 10 years in prison.

Obtaining property by deception

Section 134.1(1) is headed ‘Obtaining property by deception’ and stipulates that a person is guilty of this offence if:

• the person, by a deception, dishonestly obtained property belonging to another with the intention of permanently depriving the other of the property, and
• the property belonged to a Commonwealth entity.

To establish the offence, the prosecution is therefore required to prove each of the following ‘elements’ beyond a reasonable doubt:

• The defendant acted dishonestly, and
• Engaged in a deceptive act, which
• Resulted him or her obtaining property, such as funds or assets,
• That property belonged to a Commonwealth entity, and
• The defendant intended to permanently deprive the owner of the property.

The defendant is not guilty if the prosecution is unable to prove all of those elements.

Obtaining a financial advantage by deception

Section 134.2(1) of the Act is titled ‘Obtaining financial advantage by deception’ and provides that a person is guilty of this offence if:

• the person, by a deception, dishonestly obtained a financial advantage from another person, and
• the other person was a Commonwealth entity.

Conspiracy to defraud

Section 135.4(3) is headed ‘Conspiracy to defraud’ and states that a person is guilty of this offence if:

• the person conspired with another person with the intention of dishonestly causing a loss to a third person, and
• the third person was a Commonwealth entity.

Subsection 135.4(4) makes clear that to be convicted of the offence, it is not necessary for the prosecution to prove that the defendant knew the third person was a Commonwealth entity.

General dishonesty

An alternative to the above offences is contained in section 135.2(1) of the Act, which is titled ‘Obtaining financial advantage’ and carries a much lower maximum penalty – 12 months rather than 10 years in.

A person is guilty of obtaining a financial advantage if the prosecution can prove beyond reasonable doubt that:

• the person engaged in conduct as a result of which he or she obtained a financial advantage for himself or herself from another person,
• the person knew or believed he or she was not eligible to receive that financial advantage, and
• the other person was a Commonwealth entity.

Taxation Administration Act 1953 (Cth)

The Taxation Administration Act is another piece of Commonwealth legislation, which means it applies across the nation.

The Act contains both criminal offences for tax-related contraventions that are considered to be serious, as well as administrative penalties for breaches that do not amount to a crime.

Criminal offences in the Act include:

Failing to comply with requirements under taxation law

Section 8C(1) of the Act makes it an offence to refuse or fail, when and as required by taxation law to do any of the following things, among others:

• to give any information or document to the tax commissioner,
• to give information or a document in the manner it is required,
• to lodge an instrument for assessment,
• to produce a book, paper, record or other document, or
• to attend before the commissioner or another person.

Failing to answer questions when attending before the tax commissioner

Section 8D(1) of the Act makes it an offence for a person who attends before the tax commissioner or a delegate to refuse or fail, when and as required by taxation law to do so:

• answer a question, or
• produce a book, paper, record or other document.

The maximum penalty for these offences is 20 Commonwealth penalty units for a first offence, or 40 penalty units for a second or subsequent offence, or where the matter is referred to a court which is satisfied the person has previously been convicted of two or more offences, 12 months in prison and/or a fine of 50 penalty units.

Failing to comply with an order to comply

Section 8H(1) of the Act makes it an offence for a person who is issued with an order to comply under taxation law, to refuse or fail to do so.

The maximum penalty for the offence is 12 months in prison and/or a fine of 50 penalty units.

Administrative penalty provisions

Other types of conduct which can lead to an administrative penalty are contained in Schedule 1 of the Taxation Administration Act 1953, and include:

• Making false or misleading statements about tax-related matters, or taking a position that is not reasonably arguable about a tax-related matter, or the Tax Commissioner being put in a position of having to determine tax-related liability without documents that were required (Division 284),
• Failing to provide a tax-related return, statement, notice or other document by the time required (Division 286), and
• Failing to keep or retain tax-related records, to register or cancel registration, issue a tax invoice, comply with a release authority and other minor contraventions of taxation requirements (Division 286)

The Division contains a method for calculating the amount of the administrative penalty (fine) which assesses the ‘base penalty’ amount and ‘shortfall amount’.

Taxation Administration Act 1996 (NSW)

Prohibited taxation-related conduct is also contained in the Taxation Administration Act 1996, which is a piece of New South Wales state legislation that contains the following offences, among others:

Knowingly giving false or misleading information

Section 55 of the Act creates the offence of making a statement, orally or in writing, to a tax officer, or  giving information, orally or in writing, to a tax officer, knowing that it is false or misleading in a material particular.

Deliberately omitting information

Section 56 of the Act makes it an offence to omit from a statement made to a tax officer any matter or thing without which the statement is, to the person’s knowledge, false or misleading in a material particular.

Failing to lodge documents

And section 57 makes it an offence to fail or refuse to lodge a document, statement or return that is required to be lodged by a taxation law.

each of these offences carry a maximum fine of 100 New South Wales penalty units.

At the time of writing, one New South Wales penalty unit is equivalent to $110, making the maximum fine for each offence $11,000.

There are a number of stages the ATO will need to go through before making the serious decision to prosecute an alleged tax offence, and in the event criminal charges are brought it is important to bear in mind the onus always rests on the prosecution to prove every element (ingredient) of the offence beyond a reasonable doubt, as well as to disprove to the same high standard any legal defence/s that may be raised on the evidence.

It is also important to bear in mind that the maximum penalties are reserved for the most serious and egregious conduct.

All of that said, the maximum penalties for some of the most frequently-prosecuted tax offences in Australia are:

Criminal Code Act 1995 (Cth)

Taxation Administration Act 1953 (Cth)

Taxation Administration Act 1996 (NSW)

Again, the above are the maximum penalties that apply in the most serious of circumstances, and a person who pleads guilty to, or is found guilty of, a tax fraud or tax evasion offence can receive any of the following:

• Discharge Without Conviction (no criminal record)
• Fine
• Good behaviour bonds
• Community Correction Order
• Intensive Correction Orders
• Prison

Tax legislation also contains administrative penalties (fines) for less-serious contraventions of the rules.

Going to court can be nerve-racking, but having a strong and compassionate legal team behind you can make the experience significantly easier to deal with.

Here are 12 reasons to choose our multi-award winning legal team:

1. Proven Track Record of Exceptional Results

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8. Accredited Specialists

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   All of our lawyers have years of experience representing clients in criminal cases, and our principal has been certified by the Law Society of NSW as an Accredited Criminal Law Specialist since 2005.

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    If you are going to court and wish to arrange a free first consultation, call our 24 hour hotline on (02) 9261 8881 or send us an email at info@sydneycriminallawyers.com.au.