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Tax cheats fined $1.56M last quarter

Dec 12, 2012

According to the Australian Taxataion Office (ATO), 465 individuals and companies were convicted for tax and superannuation criminal offences resulting in over $1.56 million in fines and penalties in the last quarter.

"The ATO pursues tax cheats to the full extent of the law to ensure people who pay their fair share of tax are not disadvantaged," Tax Commissioner Michael D'Ascenzo said. 

"The courts view these matters seriously with seven custodial sentences handed down this quarter, as well as a suspended jail sentence, good behaviour bonds and community service orders." 

"A record jail term of nine years was handed to Vanuatu based accountant Robert Agius for his role in promoting a tax minimisation scheme. He was the twenty-eighth person to be sentenced under Project Wickenby." 

"We don't just prosecute complicated fraud schemes - this past quarter saw a range of offences including not lodging tax forms and making false and misleading statements." Mr D'Ascenzo said.

From 1 July to 30 September 2012:

  • 13 people were convicted of serious tax and superannuation related criminal offences, including two prosecuted under Project Wickenby
  • 452 taxpayers were convicted of deliberately evading their tax and superannuation obligations, including 440 taxpayers who failed to lodge tax returns and activity statements despite reminders and notices demanding

The ATO continues to improve automated detection methods and works closely with partners in government, law enforcement and industry to identify people avoiding their obligations. 

"Our increasingly sophisticated information matching capabilities enable us to catch those cheating the system and protect the overall integrity," said Mr D'Ascenzo. 

"Tax dollars fund vital government services such as health care and schools and superannuation funds our retirement. Those who cheat the system cheat the community."

Cases of fraud and tax evasion

  • 13 successfully prosecuted by the Commonwealth Director of Public Prosecutions (CDPP).
  • 7 custodial sentences, ranging from 2 years (with 12 months suspended) to 8 years and 11 months (with a non-parole period of 6 years 8 months).
  • 3 community service orders of up to 200 hours.
  • 2 good behaviour bonds of 12 and 18 months were imposed.

Project Wickenby

Vanuatu promoter Robert Agius was sentenced to 8 years and 11 months jail after being found guilty of conspiring to defraud the Commonwealth and conspiracy to dishonestly cause a loss. 

Mr Agius operated a 'round robin' scheme allowing participants to evade tax in Australia. It involved sending money offshore to Vanuatu disguised as expenses, including consulting fees, before returning the money to Australia in the form of a loan. Mr Agius was a senior partner at accounting firm PKF Vanuatu. 

Income tax fraud

  • 6 people were prosecuted for over $585,000 in income tax related fraud. Two received custodial sentences of 7 years 6 months with a non parole period of 5 years. Three received community service orders and one a good behaviour bond of 12 months.
  • 5 individuals were prosecuted for lodging fraudulent income tax returns over a 5 year period claiming around $200,000 in refunds. False payment summaries were created to try to verify the claims. Lengthy community service orders of 200 hours were imposed along with reparation orders for refunds received.
  • Failure to declare company income of almost $1.5million over 5 years earned 2 taxpayers jail sentences of 7 years 6 months (2 years 6 months suspended). 

GST and excise related fraud

Three people were prosecuted for GST related matters, with two outlined below receiving a custodial sentence.

  • A taxpayer who lodged fraudulent claims worth almost $92,000 for Fuel Tax Credit and other refund claims was sentenced to 2 years 6 months imprisonment (2 years suspended and 3 years good behaviour bond). The taxpayer will have to repay the entire amount of refund he received.
  • 2 years and 6 months imprisonment (18 months suspended) was handed down in one case for BAS fraud of over $450,000, False invoices had been created to try to substantiate false purchases.

Non-lodgment of, and making false and misleading statements in, tax returns and activity statements

  • 452 individuals and companies were prosecuted and convicted of tax offences.
  • 1 custodial sentence (suspended) was handed down.
  • Fines and/or good behaviour bonds were imposed.

Case studies

  • A business operator was given a custodial sentence in relation to 14 offences for failing to lodge income tax returns and 20 offences for failing to lodge GST returns for his businesses. The defendant pleaded guilty to all
    charges. He told the court that he had been overwhelmed by the time that he had allowed to pass without doing anything. In sentencing, the Magistrate stated it was not a case where a monetary penalty was sufficient. The defendant had shown a complete disregard for his taxation obligations for a very long time. He
    was sentenced to 6 months imprisonment, on all charges, to be suspended on entering into a good behaviour bond of two years and $100,000. $576 costs were awarded to the prosecution.
  • A company operating as a coffee/takeaway shop was fined $10,000 for failing to lodge 6 GST returns. The defendant had been previously convicted for failing to lodge income tax returns. The Magistrate said the offences were serious and no documentation had been provided to confirm the defendant's financial hardship or medical condition. The defendant was convicted of all charges and fined $10,000. $127 costs were awarded to the prosecution.
  • A glazier pleaded guilty to recklessly making a false or misleading statement when he claimed numerous work-related and gifts/donations deductions in his 2011 income tax return to which he wasn't entitled. He also claimed taxation offsets to which he was only partially entitled. Following an audit the claims were disallowed, resulting in a tax shortfall for the 2011 year of $10,843. The magistrate said the fraud deprived the whole community of funds. The taxpayer lived in the community, his children used the schools and his family used all public facilities that were funded by paying taxes, he said. The glazier had to pay the correct amount of tax and he was convicted, fined and ordered to pay an additional amount to the ATO of more than $6,500. Costs were awarded to the ATO.
  • A factory worker included deductions and offsets that he was not entitled to claim in his 2010 and 2011 income tax returns. The false statements resulted in a tax shortfall of $14,300. The defendant claimed he had signed a blank form and a friend had prepared the returns. The taxpayer said that he did not read that was on the form.
    The defendant was convicted and fined $2,700. He was also ordered to pay an additional amount to the ATO of over $7,200 and costs were awarded to the ATO.

Mr Taxman's comment: In this day & age of data-matching technology and tax cheat hotlines, it astounds me how some members of the community actually think that they can get away with blatant fraud like this.  Sure you may be able to get away with it once, twice or even three times but when the ATO eventually catch you they will come down hard and go back & collect every last penny.  If you are fraudulent they go back indefinitely, not just the last four years so by continusoulsy trying to defraud the community will only result in compounding the problem for you when you get caught.  Having to repay the original tax plus interest and other penalties should be a deterrent enough but depending on the scope of the fraudulent activity, you may also get some jail time.  Not really worth it for a few extra dollars that isn't really yours.  If some people past as much energy, time and effort in working hard legitimately as they do trying to commit fraud, then they wouldn't have the need to commit the crime in the first place because they would be rewarded handsomely.


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