Taxation Law - Offshore Non-Complying Arrangements

These overseas arrangements are many and varied and involve, for example:

1. debit and credit cards
2. offshore investments
3. exercised through a number of types of offshore structures

where income has either not been declared or deductions over-claimed e.g. round robin financing sending money overseas and bringing it back as loans or where R&D deductions are claimed for putative overseas services normally of a consulting nature.  The non-complying taxpayer continues on and in some cases is being detected and investigated because of the way in which they have addressed questions in their returns about the nature and extent of any overseas interests.  It is extremely hard to be absolutely consistent for the whole of one's life and to avoid detection.  You only have to look at the number of tax cases over the last 10 years to understand that the ATO will pursue you to the ends of the earth provided you are a prominent individual e.g. Glen Wheatley, the Ronans, Michael Brereton, irrespective of your individual circumstances.

The idea has been extensively promoted that if there are no documents then the fraud cannot be proven and the taxpayer will escape scott-free.  Rely on the onus of proof in criminal cases and all will be fine but unfortunately this is based on the false premise that liberty is assured and only legal fees will have to be paid.  In major cases of criminal taxation fraud it is not uncommon to be engaged both civilly and criminally where legal fees normally run into the millions and in some cases tens of millions. The only way to approach these matters is to be sensible, be properly advised by a full-time taxation lawyer and trust them to do the best they can for you, and where court action becomes necessary only where this is an option of last resort.  After all if you owe $X's does it make sense to pay $X's in legal fees and then still be liable for primary tax, interest and penalties so you may be looking at an X factor of between three or four times the original tax liability.

Where taxpayers have been introduced to promoters by accountants, business and financial advisers and some lawyers and you seek their advice and there is a risk of detection, avoid them like the plague as they have a vested interest in the taxpayer refusing to disclose any form of tax non-compliance.  It is our experience that the so-called Code of Silence does not work because where the adviser is at risk and the taxpayer does not play ball the adviser seeks an indemnity from prosecution ratting on their client leading to criminal prosecution.  There are no Chinese walls to protect the taxpayer, only a competent, skilled and valued adviser who is expert in this area.  Remember, the turncoat adviser is aware of all your skeletons as he helped you set up the scheme or arrangement for which he was well paid and may have continued to receive either fees or commission or both since inception.  They know where the bodies are buried e.g. the falsification of documents or transactions or ownership of assets, entities or structures, how water was changed into wine, namely, money laundering, round robin financing and criminal systemisation.  They are not there to protect you but to look after themselves.

Seek competent taxation legal advice and representation from LAC Lawyers in these matters.