Tax Fraud and Other Criminal Offences

In Australia, there are three common tax offences which are a violation of the Criminal Code Act 1995, and subject to prosecution. These include tax fraud, conspiracy to defraud, and tax evasion and are about seeking financial advantage illegally. In this article, we discuss what tax fraud and tax evasion are and what the associated penalties for this crime are.

What is tax evasion and fraud?

Tax fraud is when a person deliberately fails to declare some or all of their business or personal income, or have been dishonest and overstated their expenses in an attempt to reduce their total amount of tax payable to the Australian Tax Office (ATO).

When people commit these tax fraud offences, they are participating in tax evasion.

Examples of tax faud

Some of the most common examples of tax fraud includes offenses such as:

  • failing to claim GST;
  • not reporting cash wages;
  • not reporting all of your income;
  • not paying employees their super entitlements;
  • failing to lodge tax returns;
  • claiming deductions for expenses that are not actually incurred;
  • failing to forward tax withheld from an employee’s wages to the ATO; and
  • failing to withhold tax from an employee’s wages by paying them ‘cash in hand’ instead.           

How to avoid committing tax offences

Most of these common offences are fairly straightforward, and typically not committed by accident – they are intentional choices to avoid paying taxes owed. However, if you think you may have inadvertently committed a crime, you should contact a lawyer directly to discuss your options because accidents do happen from time to time. In fact, here are some tips for how you can take care to avoid inadvertently committing tax offences:

  • File your taxes and tax returns early
  • Integrate a fraud alert or credit freeze in your credit file or profile
  • Learn about the different forms of scams and identity theft
  • Protect your personal identity and information at all cost
  • Regularly check your tax file and account to make sure no anomalies are taking place
  • Hire honest and efficient accounting advisors to help you with your taxes.

What is the difference between tax evasion and tax avoidance?

Tax evasion is very different to tax avoidance.

Tax evasion is illegal and involves not paying taxes owed, reporting taxes that are not allowed, and not reporting income.

Tax avoidance, on the other hand, is a legal way to minimise the taxes a business pays. Businesses might set up employee retirement plans, or availing all legal deductions or sheltering income from tax payments; all legitimate and legal ways to reduce a business’s tax.

What are the penalties?

There are a range of different penalties that can be imposed in Australia for tax evasion and fraud. These penalties may include:

  • Imprisonment of up to 10 years
  • Fines
  • Matter proven but dismissed
  • Good behaviour bond for a specified period of time
  • Community service order requiring the offender to undertake unpaid community service work Intensive Corrections Order (ICO)
  • Suspended sentence

More information

If you have been accused of evading tax, get in touch with our team of qualified defense lawyers today to discuss how the law applies to your specific situation and what your options of defense might be.