Taxation Offences

The Australian taxation system operates within a self assessment environment and relies on taxpayers acting honestly in complying with their taxation obligations as prescribed by legislation administered by the Commissioner of Taxation ("Commissioner").

The Commissioner is empowered to ensure compliance of taxation laws by various methods including administrative penalties and prosecutions.

Proceedings against taxpayers whose actions or omissions constitute an offence can be initiated by the Australian Taxation Office ("ATO") or the Commonwealth Director of Public Prosecution ("CDDP").

The main taxation offences are contained in the following legislation,

• Taxation Administration Act 1953
• Income Tax Assessment Act 1936
• Sales Tax Assessment Act 1992
• Fringe Benefit Tax Assessment Act 1986

These Acts provide a range of taxation offences, including

• Making false and misleading statements.
• Failure to correctly keep accounting records.
• Failure to lodge taxation returns or activity statements.
• Failure to pay tax or remit the tax deductions of employees.

In more serious cases a taxpayer can be prosecuted for offences involving fraudulent conduct under the Commonwealth Criminal Code 1995.  Other serious offences under the Code involve the obstructing or hindering of a Commonwealth public officer by violence, threats or intimidation.

In deciding whether to proceed to a prosecution, the ATO or the CDDP they will rely on their own respective published guidelines.  The main considerations will include the seriousness of the offence and the particular circumstances of the taxpayer.

Another important consideration whether to commence a prosecution against a taxpayer would be to demonstrate to the wider community the importance of compliance of the tax laws and thereby act as general deterrent.

TAXATION OFFENCES BY CORPORATIONS

Persons who are involved in the management of corporations that breach taxation laws may be held criminally liable for those breaches as if they committed the offences themselves.  Although it is a defence to that liability if the person can show they were not directly or indirectly involved in the activity that caused the offence.

Often a person is unaware of the obligations they take on when they have been appointed to a management position in a corporation and it advisable that they obtain appropriate legal advice in this regard.

TAX AGENTS AND TAX ADVISORS

Taxpayers often rely on the advice and role of tax agents and advisors with respect to their taxation affairs.  Where a tax agent or advisor is knowingly involved with a taxpayer to submit false information to the ATO, both may be charged with the same offence.

Aggressive tax schemes have often been promoted as a way of minimizing taxpayers obligations but have later been deemed to be tax avoidance schemes.  In these cases taxpayers and their agents or advisors have suffered the full force of criminal responsibility.

Taxpayers should be wary of any scheme that is promoted to avoid their taxation liabilities and are strongly advised to seek the independent legal advice with regard to the legality of such promoted schemes.

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