What is tax fraud?

Fraud is about making false representation. So when it comes to tax fraud, individuals are essentially providing the Australian Taxation Office (ATO) with evidence that is false and misrepresents their income. This usually means their tax returns are intentionally incorrect, with expenses overstated, neglecting to report their full and complete income, or giving dishonest information about where they live.

What are the penalties for tax fraud?

The consequences for tax fraud are severe. And unlike most interactions with the tax office, the matter cannot usually be solved through repayment of the money owed. One someone has been convicted of the offence, it’s usually too late and the individual could face some harsh penalties for their actions, including a maximum term of imprisonment for up to 10 years! Other penalties could include:

  • The matter is proven but dismissed: This means that you are not convicted and your actions may be dismissed upon the condition of good behaviour.
  • Fine: You could receive a fine up to $250,000, however this fine may not be greater than the maximum penalty for the offence.
  • Good Behaviour Bond: You are ordered to demonstrate good behaviour for a specified period of time. If this is achieved, there is no further penalty. If this is breached, you are to be summoned back to court and resentenced.
  • Community Service Order: Will typically involve unpaid community work or attendance at a Centre to undertake a course, such as Anger Management.
  • Periodic Detention: Being detained in a jail for two-days a week, often requiring you to undertake unpaid work during the detention period.
  • Suspended Sentence: A term of full time jail upon an offender, but the jail sentence is suspended upon the offender being released on good behaviour bond
  • Full Time jail: Offenders are usually detained in a low security prison for the duration of their imprisonment.

As well as this, those who are found guilty of tax fraud may also be required to repay the prosecution costs.

What else do you need to know about tax fraud?

Tax audits and assessments are done regularly in Australia with an aim to identify fraudulent actions that may have previously gone unnoticed. If you have a seemingly simple tax return, you can expect that you have a two year window from the date of the relevant assessment for the ATO to contact you about any past returns you may have lodged. If your tax is a bit more complex, it is likely that the applicable time limit is 4 years from the date of the relevant assessment. However, despite these guidelines, if you have committed tax fraud, the ATO are able to review your past tax returns for however long it deems appropriate, whether that is 10 or even 20 years!

More information

Navigating the tax system can be quite complex. Even a small, unintentional mistake may become a costly error for an individual or business, with long-term consequences. If you have been charged with a tax-related offense, we highly recommend reaching out to our team of qualified lawyers who are able to help you understand your rights and the best course of action. This is a highly specialised field of law, and you require a team of lawyers who truly understand the ins and outs of the taxation system and the workings of the ATO.