Tax Law Offences
Tax fraud is a federal crime considered very serious. It is regarded as a crime against society as a whole because taxation levies money from all people for the public good.
Examples of tax fraud
Tax fraud comes in many forms, including:
- falsified documents with tax returns;
- scams to reduce payments;
- misuse of deductions and offsets;
- not claiming GST;
- not reporting cash wages;
- failing to pay superannuation to employees;
- paying employees with cash;
- not forwarding money withheld from employee wages to the ATO.
Tax avoidance or minimisation is a legitimate practice used by a business to ensure it does not pay any more tax than necessary. This is not a crime and is used by accountants and solicitors as part of a business plan. This is in contrast to a deliberate dishonest attempt to avoid paying required tax, which is tax fraud.
- section 134.1(1): obtaining Commonwealth property by deception;
- section 134.2(1): obtaining a financial advantage by deception;
- section 135.4(3): conspiring to cause a loss to the Commonwealth.
Obtaining Commonwealth property by deception
Property is generally defined as money owed in tax but can be other financial assets. A person is taken to have obtained property if they:
- take ownership, possession or control of it for themselves or another person; or
- enable ownership, possession or control of it for themselves; or
- induce someone to pass ownership, possession or control of it to another person; or
- induce someone to retain ownership, possession or control of it.
The prosecution must prove beyond a reasonable doubt that the person’s actions were deliberately deceptive and that they resulted in the person obtaining property that would otherwise belong to the Commonwealth.
Obtaining a financial advantage by deception
The prosecution must prove beyond a reasonable doubt that the person’s actions were deliberately deceptive and that they resulted in the person gaining a financial advantage from the Commonwealth.
A less serious alternative to this offence is section 135.2(1), obtaining financial advantage, which carries a maximum penalty of 12 months imprisonment. If the prosecution case appear strong, a defence lawyer is likely to attempt to have the less serious offence substituted, in a bid to reduce the maximum sentence from 10 years.
Conspiring to cause a loss to the Commonwealth
The prosecution does not have to prove that the person knew the defrauded party was a Commonwealth entity. The person and their co-offender may share joint liability.
A defence of honest and reasonable mistake of fact may be raised where a mistake was made, for example, due to a misunderstanding or a book-keeping. Such a mistake would need to be considered reasonable in the circumstances. This defence cannot be made where there was carelessness, recklessness or laziness.
Duress may be employed as a defence if a person were forced to commit the offence under a serious threat, a threat which was so serious as to justify the conduct, and there was no reasonable way to avoid the offence.
The maximum penalty for the three main offences is 10 years’ imprisonment. Hefty fines can also apply.
For advice or representation in any legal matter, please contact Armstrong Legal.