Tax Law - Debt recovery - False or misleading statements
Date: January 12, 2012
Authors: Jonathan Lim B.A., LL.B. (Hons)
This article deals with the ATO’s power to impose and increase administrative penalties upon unpaid tax debts, in situations where the taxpayer has made a false or misleading statement.
False and misleading statements
From 4 June 2010, any entity who makes a false or misleading statement to the Commissioner or other tax administrator (or to any other entity where the statement was required or permitted under a tax law) about a tax related matter can be subject to administrative penalties.
“Statement”
In this context, “statement” is not limited to actual words spoken or written in correspondence. Rather, it extends to anything disclosed about a tax related matter, including returns prepared and lodged with the ATO, whether or not by a tax agent, and statements made to ATO employees.
“Statement” covers all forms of oral or written communication and all forms, including electronic communications.
“Or to any other entity”
Before 4 June 2010 the statement had to be made to some sort of tax authority. From 4 June 2010, a false or misleading statement can include statements made to any entity, provided the statement is required or permitted by tax law.
For example, statements provided by a super fund trustee to beneficiaries, or by employers to employees, can be covered if such statements are required under tax law.
“False or misleading”
False or misleading covers omissions as well as positive statements. For example, an omission of an amount of income from a tax return is taken to be the same as a positive (and false or misleading) statement that the income was not derived.
No need for shortfall
Before 4 June 2010, false or misleading statements were exempt from penalties if the statement did not result in a shortfall amount. From 4 June 2010, there is no need for a shortfall amount to result.
Increase in penalty
In the case of false or misleading statements, a 20% increase of the base penalty amount may be imposed if a taxpayer, as well as making a false or misleading statement:
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is unwilling to cooperate with the ATO;
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becomes aware of a previously unsuspected misleading or deceptive aspect of a statement but does not inform the ATO or fails to make any arrangements to resolve the matter within reasonable time; and/or
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has taken steps to inhibit the ATO from finding out about the false or misleading nature of the statement.
Increase of the base penalty amount
The increase of the BPA is not cumulative which means that the penalty may only be increased by 20% even if the two or more conditions apply to the taxpayer's case. However, the Commissioner has the discretion to increase the original base penalty amount should the transgressions from the taxpayer prove appropriate for that condition.
For example, instead of providing the correct information to resolve the matter, the taxpayer may provide additional false information to the ATO such that intentional disregard of the law may apply instead of a lighter sanction.
Reduction of the base penalty amount
Conversely, the ATO may reduce the penalty to be imposed if the taxpayer is willing to cooperate. The amount to be reduced will depend on how soon the entity informs the ATO of the false or misleading statement.
For example, an unprompted voluntary disclosure – a disclosure made by the taxpayer before a review or audit is conducted – may reduce the amount of the penalty by as much as 80% or to nil if the original shortfall amount was less than $ 1,000.
A taxpayer may also make a prompted voluntary disclosure, ie after being notified by the ATO, whereupon the reduction will be a maximum of 20%.
Conclusion
As can be seen, the rules relating to false or misleading statements can be harsh. They have got even harsher since 4 June 2010.
If you have concerns about false or misleading statements, or wish to make a voluntary disclosure, call LAC Lawyers and we can provide advice and assistance.
Tax Law - Promoter penalty laws(Part 4)
Date: February 22, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
Part 3 of this article dealt with the actions that may be taken against promoters of tax exploitation schemes (TESs), and looked briefly against the ability of the promoter to enter a voluntary undertaking instead of being punished. This part of the article deals with the civil penalties and statutory injunctions that may be imposed as remedies against promoters.
Tax Law - Cash Economy
Date: February 20, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
In November 1996 Michael Carmody, the former Commissioner of Taxation established the Cash Economy Taskforce to address the Commonwealth’s escalating problems regarding businesses that participate in the cash or underground economy. While the ATO has had programmes in the past to address this problem, the Commissioner found it necessary to create a project that would specialise in the matter. The Taskforce aims to refine strategies and continue those that have been successful in mitigating and pursuing participants of the cash economy to rid the Commonwealth of the problem.
Tax Law - Financial Year 2010-2011 - Offences, convictions, recovered amounts and sentencing
Date: February 20, 2012
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The ATO has become more vigilant and has adopted a far more sophisticated approach to pursue individuals and companies who not comply with their tax-related obligations. The 2010-2011 financial year has lead to a large number of tax-related convictions and superannuation offences.
Tax Law - Debt Recovery - False or misleading statements(Part 2 of 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with the ATO’s power to impose and increase administrative penalties upon unpaid tax debts, in situations where the taxpayer has made a false or misleading statement.
Tax Law - Debt Recovery - False or misleading statements(Part 3 of 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with the ATO’s power to impose and increase administrative penalties upon unpaid tax debts, in situations where the taxpayer has made a false or misleading statement. This part of the article deals with “recklessness.”
Tax Law - Debt Recovery - False or misleading statements(part 4 of 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This article deals with the ATO’s power to impose and increase administrative penalties upon unpaid tax debts, in situations where the taxpayer has made a false or misleading statement. This part of the article deals with “intentional disregard”.
Tax Law - Large business entities(Part 1)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 2)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 3)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Widely based tax disputes(Part 1)
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
Taxation is a complex and ever-evolving field where, inevitably, oddities and contradictions arise every so often. The ATO is aware of this likelihood. Typically, a dispute over the application of tax law is between the ATO and a taxpayer over a specific tax matter. However, there are times when disputes between taxpayers and the ATO, over the same matter, happen on a larger scale. These instances are what the ATO calls as widely-based tax disputes.
Tax Law - Widely based tax disputes(Part 3)
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
This part of this article looks at the principles that the ATO uses when assessing a settlement proposal relating to a widely-based tax dispute.
Debt Recovery - The Essential Guide to Debt Recovery - Part 1
Date: April 18, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
We have all heard about Australia having a two-speed economy since the GFC and according to the pundits apparently the separation between the two areas of business and commercial activity has widened. The resources sector is booming whilst general business including retail is struggling, interest rates are on hold and the current government is struggling to manage the economy.
Debt Recovery - The Essential Guide to Debt Recovery - Part 2
Date: April 18, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
As we have stated earlier we have put up our Cost Agreement and Disclosure Document on our website to ensure the maximum degree of transparency with respect to the terms and conditions of our retainer. It provides clients with the opportunity to acquaint themselves with all the necessary things that they need to know about engagement of a lawyer including privacy, confidentiality and storage of records. You should do the same.
Debt Recovery - The Essential Guide to Debt Recovery - Part 3
Date: April 18, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Early intervention is the best means possible to ensure that you get paid before somebody else does whilst educating the debtor that if they wish to continue doing business with you then unless they abide by your terms and conditions they will need to go elsewhere. Although many people are honest debt loads increase substantially during periods of muted economic activity and therefore it needs to be watched closely. No one who is owed money should feel shy about approaching anyone who has gone beyond your normal credit terms. After all you are not a bank or a finance provider and shouldn’t be treated as one.
Debt Recovery - The Essential Guide to Debt Recovery - Part 4
Date: April 18, 2011
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Criminal Law - Sentencing in the Local Court
Date: October 08, 2010
Author(s): Jana Whitby B.A., LL.B. (Hons.)
Often I am asked by my clients who have been charged with common offences such as assault or drink driving what the likely result will be if they enter a plea of “Guilty”. This is not a question which can be answered with much certainty given that even when to individuals are charged with exactly the same charge, the possible outcome when it comes to that individual’s sentencing can vary according to factors such as in which Local Court the matter is dealt with, which Magistrate determines the sentence, the sentencing options available to the Magistrate and the individual’s subjective circumstances.
Taxation Law - Tax Fraud
Date: September 14, 2010
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Butterworths Australian Legal Dictionary defines fraud as "an intentional dishonest act or omission done with the intention of deceiving". Obtaining a benefit by deception is to obtain an advantage or a profit or a gain by deceit. LAC Lawyer's Taxation team offer expertise in all aspects of Business & Commercial Law. Call LAC Lawyers today on 1300 799 888.
Taxation Law - CGT and Trust Cloning
Date: June 10, 2009
Author(s): LAC Lawyers, Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
A Discretionary trust is one of the most sought after trust structures in view of the enormous benefit that follows from the establishment of such a trust. The Discretionary Trust structure creates a framework for family assets to be passed from one generation to another without losing control over key assets, allows for the protection of assets from creditors, creates an effective tax structure and in particular allows access to Capital Gains Tax (CGT) concessions.
Criminal Law - Centrelink Offences
Date: January 23, 2009
Author(s): LAC Lawyers, Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Social security fraud is a general malaise affecting the ability of the Commonwealth Government to provide benefits to the needy. Centrelink fraud is committed when a person knowingly gives false and misleading information to obtain access to a benefit and to obtain a payment that they should not be getting; or misrepresents their circumstances; or fails to inform Centrelink that they have no further entitlement to benefits.
Criminal law - Centrelink Fraud
Date: January 16, 2009
Author(s): LAC Lawyers
Centrelink fraud has become rife in the last few years and Centrelink investigators have become more and more ardent at uncovering this. There is a deliberate attempt to rip-off the system and today’s sentencing shows how harshly welfare cheats can expect to be treated by the courts.
Taxation Law - Failing to Furnish Income Tax Returns - Part 2
Date: November 01, 2007
Author(s): LAC Lawyers
Whilst it is conceded and supported that Income Tax Offences are serious matters and are far from trivial, there may be objective facts and mitigating circumstances which would warrant the non-recording of a conviction as provided for in section 19B.
What to expect when you call LAC Lawyers
Date: December 13, 2006
Author(s): LAC Lawyers
LAC Lawyers is a full service firm dedicated to the provision of superior legal services in Australia. Our aim is to provide unrivalled client satisfaction coupled with high quality service and advice. When you call LAC Lawyers our friendly reception staff will spend time with you to identify the area of law your enquiry relates to then pass you on to one of our qualified solicitor's who can help you.
Taxation Law - Tax Evasion - How Do The Criminal Courts Treat Tax Evaders
Date: October 11, 2006
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
The most serious case in this area was handed down by the New South Wales Court of Criminal Appeal in R. v Ida Ronen, Nitzen Roden and Izhar Ronen on the 19th April 2006. The message which the courts delivered in this case is that they will treat all cases of serial tax evasion as extremely serious leading to long periods of imprisonment irrespective of the taxpayer’s individual circumstances even where taxpayers have paid their penalty tax in full.
Criminal Law - Sentence and penalty options available to courts if convicted of a criminal offence
Date: September 26, 2005
Author(s): LAC Lawyers
Murder. Bigamy. Robbery. Bushfires. Terrorism. Domestic violence. Computer offences. Concealing the birth of a child. Fraud. Rape. The list of criminal offences for which a person may be convicted in any Australian jurisdiction is extensive.