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Fraud & evasion penalties

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Contact Armstrong Legal:
Sydney: (02) 9261 4555

John Sutton

It goes without saying that the consequences of a conviction for tax fraud can be extremely serious. One only needs to look at the high profile example of Glen Wheatley who was jailed for 18 months for his role in a complex tax avoidance scheme.

We have included some real life examples (we were not involved in these cases) at the bottom of this page to assist you with the types of penalties that are imposed for tax fraud and evasion offences.

The important thing to remember is that, unlike most interactions with the tax office, the matter cannot usually be solved through repayment of monies or the like. Once the matter is being actively prosecuted, it is often too late to attempt to pay the money back.

A person convicted of one of the relevant offences can be jailed for as long as 10 years. There is a range of other penalties that can be imposed, including community service, periodic detention, and good behaviour bonds, all of which are serious and all of which will result in a criminal record if a conviction is made.

Penalties that can be imposed:

Matter proven but dismissed

In some very limited cases a court may dismiss a charge against you notwithstanding you pleaded guilty to the offence. This means that you are not convicted and you will not have a criminal record. The court may make the dismissal of the charge conditional upon you being of good behaviour for a specified period. If you are not of good behaviour you could be summoned to court to be sentenced again in relation to this matter.

Fine

A fine may be imposed if the matter is not that serious. The amount of the fine cannot be greater than the maximum penalty for the offence.

Good behaviour bond

A good behaviour bond is an order of the court that you be of good behaviour for a specified period of time. If you are of good behaviour for the time set by the court there is no further penalty. However if you are not of good behaviour you may be summoned to court to be re sentenced for the offence.

Community service order

A Community Service Order (CSO) involves either unpaid work in the community at a place specified by Probation and Parole or attendance at a Centre to undertake a course, such as Anger Management. In order to be eligible for a CSO you have to be assessed by an officer of the Probation service as suitable to undertake the order. Certain medical conditions could exclude you from being suitable to undertake a work order.

Periodic detention

This involves you being detained in gaol for two days a week. Periodic detention can be served on the weekend or mid week. You may be required to do some unpaid work during your detention.

Suspended sentence

A court imposes a term of full time gaol upon an offender, but the gaol sentence is suspended upon the offender being released on a recognizance (good behaviour bond) for a period of up to five years.

Full time gaol

Tax fraud and white collar crime offenders who are sentenced to a full time gaol sentence are usually detained in a low security prison.

Real life examples of penalties imposed:

R v Leonard (NSWSC, 1997)

The defendant was a partner in an advertising agency that engaged in a system of essentially creating false invoices, with the purpose of reducing the amount of taxation payable. It appears that the amount in question was somewhere between $75,000 and $100,000.

Mr Leonard was sentenced to four months in full time custody as well as a good behaviour bond of two years upon his release.

R v 'Connor (NSWCCA 2002)

The defendant engaged in a fraud whereby contractors paid cheques to Mr 'Connor's companies, which was then used to pay these company's workers in cash, thereby avoiding the need to deduct a tax contribution. Mr 'Connor retained a 7% commission from the arrangement.

Mr 'Connor made a profit of almost $140,000, and the Commonwealth was defrauded of almost $1.5 million.

As well as being ordered to repay over $160,000, Mr 'Connor was sentenced to two year's imprisonment with a non-parole period of 18 months.

R v Cappadona (NSWCCA 2000)

The accused made overtime payments in cash and did not withhold the necessary amounts for taxation purposes. An estimate of the lost revenue was over $3.5 million, most of which had to be repaid by the companies.

The two defendants, husband and wife, were sentenced to 18 months and 12 months periodic detention respectively.

R v Ridley (NSWCCA 2007)

The defendant submitted false BAS's which would have resulted in incorrect payments of almost $3 million to the defendant's companies.

The defendant was sentenced to almost eight years' imprisonment with a non-parole period of almost five years.




where to next?

If you suspect that you may be under investigation, or if you have been charged with an offence, it is vital to get competent legal advice as early as possible. Our lawyers are highly specialised in corporate crime and will be able to guide you through the process while dealing with the various authorities related to your matter.

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