1,500 prosecutions for tax and superannuation offences this financial year

The Australian Taxation Office’s (ATO) prosecution of more than 1,500 people
for tax and superannuation offences sends a clear warning to tax cheats that
they can expect to be caught.

Speaking at the release of the ATO’s third quarter update of prosecution
results, Tax Commissioner Michael D’Ascenzo said the figures show that there are
significant risks and consequences for people who do not properly fulfil their
legal and civic responsibilities in relation to tax and superannuation.

“The year-to-date results to 31 March reveal that the ATO successfully
prosecuted 1,106 individuals and 400 companies for tax and superannuation
offences,” Mr D’Ascenzo said.

“We have a range of measures in place to ensure we detect and deal with those
who evade their obligations. This includes information sharing and working with
other government agencies, and also with overseas counterparts.

“The ATO pursues tax cheats to the full extent of the law to ensure honest
taxpayers have their interests looked after. Australians don’t want to face an
unfair burden when dishonest people avoid their tax obligations, and they expect
the ATO to provide a level playing field.”

The prosecution results show that the 1,106 individuals and 400 companies
successfully prosecuted comprised:

Thirty people prosecuted and convicted of serious tax crime offences, with
sentences ranging from two months up to nine years. Five of these convictions
occurred under Project Wickenby. These serious convictions cover a range of
offences including attempting to dishonestly obtain a financial advantage by
deception, dealing with the proceeds of crime, and illegally seeking access to
superannuation funds.

• 1,076 individuals and 400 companies were successfully prosecuted for other
  tax offences. Of these, 916 individuals and 332 companies had a formal
  conviction recorded against them. Offences included failing to lodge a tax
  return, providing false and misleading information, and receiving a fee for
  preparing an income tax return when not being a registered tax agent.

With the quarter’s figures largely on trend, Mr D’Ascenzo said it was
important to note the ATO’s commitment to encouraging willing and proper
participation in the tax and superannuation systems.

“Prosecution is often a last resort, but it’s there to protect the vast
majority of taxpayers who do the right thing from being disadvantaged by those
that don’t,” Mr D’Ascenzo added.

People who are unclear of their tax or superannuation obligations, or are
struggling to meet their obligations, should contact the ATO on
13 11 42 to discuss their situation.

If you believe someone is doing the wrong thing, you can report suspected tax
fraud by calling the ATO on 1800 060 062. Registered Agents may
use the dedicated Registered Agent phone line on 13 72 86
(using Fast Key Code 34), and this call may also be transferred to the Tax
Practitioners Board.

Significant prosecutions for the March 2012 Quarter

Project Wickenby

A NSW man was convicted and sentenced to a two year suspended prison sentence
for obtaining a financial advantage by deception. He claimed false deductions
for interest expenses on a $275,000 fraudulent loan arrangement where he
attempted to avoid an $82,500 tax liability.

Income tax

An overseas student was convicted and sentenced to 12 months jail under the
Criminal Code Act 1995 for dealing with the proceeds of crime. He operated seven
bank accounts into which he received more than $80,000 in income tax refunds
that he was not entitled to by lodging false income tax returns. He created
false tax returns in the names of different individuals who he claimed were his
spouse, and requested that the refunds be paid into his various bank
accounts.

Superannuation

A Queensland man was convicted and sentenced to six months jail for breaching
the Superannuation Industry Supervision Act 1993 by unlawfully withdrawing more
than $365,000 from a self-managed superannuation fund for which he was the
trustee. He used the funds for his personal use despite not meeting any
legitimate condition of release for the superannuation funds.

Goods and Services tax (GST)

A NSW man was convicted and sentenced to two years jail for attempting to
dishonestly obtain a financial advantage by deception. He fabricated an invoice
seeking a GST refund of $36,000.

A company director from NSW was convicted and sentenced to four years and
three months jail for attempting to obtain more than $540,000 of GST refunds to
which he was not entitled. He created companies that undertook no business
activities but he still submitted Business Activity Statements (BAS) for the
companies and sought GST refunds for fictitious transactions. The Magistrate
stated the offences were serious and noted the bulk of the proceeds of the fraud
were used by the offender for their own purposes. The magistrate said the
four-year sentence was to serve as a deterrent to the general community because
the offences were in breach of trust in self-reporting under tax laws.

A painter from NSW was convicted and fined $1,500 for making a false
statement about his GST obligations. The Magistrate said that when someone had
not paid their GST obligations it was important they be punished severely to
send a message to others who may be thinking of behaving in the same way. In
addition to the fine, a $750 reparation order was made.

False and misleading statements

An IT support engineer from NSW was convicted and fined $3,500 for three
offences of recklessly making a false or misleading statement. The case was
based on information received from the Department of Immigration and Citizenship
(DIAC). The defendant applied for a visa for migration to Australia for his new
spouse who had a different name to the two other spouses claimed by the
defendant in previous income tax returns. The Magistrate stated the defendant
had confirmed the misleading statements in that there was no evidence of the
spouses ever entering Australia and the defendant had acknowledged they were
never Australian residents. In addition to the fine, a reparation order of
$2,596.50 was made.

A NSW cleaner was convicted and fined $2,200 and given a reparation order of
$5,090.70 for recklessly making a false or misleading statement. The Magistrate
distinguished this offence from a failure to lodge matter by highlighting this
was an active, not a passive, offence.

An IT manager was convicted and fined $3,300 and made to pay a reparation
order of $2,603.05 for four offences of recklessly making a false or misleading
statement. The case was based on information received from DIAC that the accused
had falsely claimed the dependant spouse tax offset in his 2007 to 2010 income
tax returns. The defence informed the court that the defendant had a girlfriend
in India and thought he could claim her as his dependant spouse. The defendant
was only made aware of his mistake when he married another woman and applied for
her visa to Australia. The Magistrate said: “The defendant will be convicted -
this court takes a dim view of these types of offences, especially tax offences
and frauds on the public purse. These are very serious offences.”

A Victorian credit consultant was convicted and fined $800 for two offences
of recklessly making a false or misleading statement. The case was based on
information received from DIAC that the man had falsely claimed the dependant
spouse tax offset in his 2007 and 2008 income tax returns. This was discovered
as a result of a review undertaken by DIAC which identified a mismatch of
information provided by the accused in a spouse visa application and in his
income tax returns for those years. The accused had provided a statement to a
DIAC officer that he was not married or in a de facto relationship in the
financial years concerned.

Failing to lodge returns

An air conditioner maintenance man from NSW was convicted and fined $20,000
for six offences of failing to lodge income tax returns and 23 offences for
failing to lodge GST returns.

A NSW-based credit reporting and debt collection company was convicted and
fined $65,000 for four offences of failing to lodge income tax returns and 45
offences of failing to lodge GST returns.

A NSW watch and jewellery retailer was convicted and fined $50,000 for 45
offences of failing to lodge GST returns.

A Queensland company was convicted and fined $6,000 for failing to lodge an
income tax return and three offences for failing to lodge GST returns. The
defendant is a registered tax agent and submitted a written plea of guilty. The
defendant advised he was having issues with his accounting software and had no
record of receiving the final notice. The Magistrate stated the defendant had
provided unacceptable explanations and as a tax agent was assumed to know his
obligations. The Magistrate rejected the statement that the defendant didn’t
receive the final notice.

A solicitor from Western Australia was convicted and fined $18,000 for 11
offences of failing to lodge GST returns.

A NSW dental surgeon was convicted and fined $12,000 for seven offences of
failing to lodge GST returns.

A NSW optical dispensing company was convicted and fined $75,000 for 12
offences of failing to lodge GST returns.

A road crew member from the Northern Territory was convicted and fined $1,900
for two offences of failing to lodge income tax returns.

To avoid being a part of statistic please contact Halifax Business Consulting Pty Ltd to help you with your Tax Obligations.