What is tax fraud or tax evasion in Australia?
In Australia, a finding of tax fraud or tax evasion by the Australian Taxation Office (ATO) can have significant consequences for a taxpayer.
If the ATO has made a finding of tax fraud or tax evasion in your case, you should contact King Lawyers immediately and get legal advice on your legal rights and obligations.
What is tax fraud in Australia?
The ATO has provided the following view on tax fraud:
“Fraud, in the context of our amendment powers, involves making a false representation to the Commissioner. A representation will be fraudulent if the evidence shows the person knew it was false, or made it with such indifference to its correctness that the person could not have held any real belief that it was true.”
What is tax evasion in Australia?
The ATO has provided the following view on tax evasion:
“While the courts have been reluctant to define ‘evasion’, it has generally been taken to mean behaviour that involves some blameworthy act or omission that results in an avoidance or shortfall of tax. Blameworthy behaviour contrasts with what a reasonable person would have done in the circumstances.
Typically, evasion in the income tax context involves omitting income from a return or wrongly claiming a deduction without any credible or excusable explanation. Even where an act or omission is unintentional, it may still be blameworthy when judged objectively against the standard expected of a reasonable person.”
In decision whether or not tax evasion has taken place, the ATO usually asks the following questions:
- What should a person, standing in the taxpayer’s shoes, be expected to have done if acting reasonably and honestly?
- What reasons have been provided by the taxpayer for not doing what would be expected of such a person who acted reasonably and honestly?
- To what extent are the taxpayer’s acts or omissions still considered to be blameworthy in light of the reasons provided by the taxpayer?
What happens if the ATO makes a finding of tax fraud or tax evasion?
In Australia, there are time limits for tax audits and amendment of income tax assessments. If your tax affairs are fairly simple, it is likely that the applicable time limit is 2 years from the date of the relevant assessment. If your tax affairs are complex, it is likely that the applicable time limit is 4 years from the date of the relevant assessment.
However, if the ATO has formed an opinion that you have committed tax fraud or tax evasion, you will not get the benefit of the ordinary amendment periods and there will be no limits on how far back the ATO can go back to amend your tax assessments. This means that the ATO can audit you for the last 10 years or 20 years, as the ATO considers appropriate.
Do you need an experienced tax lawyer to give you legal advice on your Australian tax affairs?
This content of this article is offered as general information only and should not be relied on as specific legal advice on findings of tax fraud of tax evasion by the ATO.
To get legal advice from King Lawyers on your specific circumstances, please contact us to arrange an initial consultation with our professional taxation lawyers.