1. Tax Crime and Compliance Issues
Chapter 34
Tax Crime and Compliance Issues
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Tax Crime
Tax crime is criminal behaviour designed to evade tax obligations by fraudulently use the system to obtain an improper financial benefit
Criminal attacks on the tax system can be made by individuals and organised groups both from within and beyond Australia’s jurisdiction
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Tax Crime
The most common methods of attack are:
Identity crime
Secret offshore dealings
High volume low suspect transactions
Credit and debit card fraud
Illicit tobacco growing and trading
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Tax Crime
Tax Crime and the ATO
The ATO takes firm action against taxpayers, intermediaries and others who engage in tax crime
As tax crime is often associated with other crimes, the ATO co-operates with other agencies to investigate serious breaches
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Project Wickenby
Project Wickenby is an ongoing multi-agency taskforce involving:
the Australian Federal Police
the Australian Taxation Office
the Australian Crime Commission
the Australian Securities and Investments Commission
Australian Transaction Reports and Analysis Centre, and,
the Commonwealth Director of Public Prosecutions
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Project Wickenby
aims to protect the integrity of Australian financial and regulatory systems by preventing people from promoting or participating in the abuse of tax or secrecy havens
Project Wickenby deals with the abusive use of secrecy havens which includes, but is not limited to, arrangements involving false deductions and concealed income and gains
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Project Wickenby
Works with governments and organisations around the world to fight financial crime on a global scale by:
accessing information and resources from foreign governments to assist with criminal investigations and prosecutions
sharing information, strategies and intelligence gathering and information sharing with international organisations and foreign tax administrations
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Targeting Tax Crime
Protecting honest taxpayers from those who would abuse the community’s tax system is a high priority for the ATO When tax crimes have been committed the ATO will seek to bring those offenders to account
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Types of Tax Crime
Tax Refund Fraud by Organised Crime
Other Fraud and Evasion
Cash Economy
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Types of Tax Crime
ATO review techniques
To make it harder for dishonest operators to get away with not reporting cash income the ATO has developed performance benchmarks which make it clear what is expected from businesses in a range of industries
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Types of Tax Crime
ATO review techniques
The ATO looks at ratios of:
cost of goods sold to turnover
labour to turnover
rent to turnover
GST-free sales to turnover
motor vehicle expenses to turnover
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Types of Tax Crime
Scams
A scam is a fraudulent invitation, request, notification or offer designed to obtain someone’s personal information or money, or otherwise obtain a financial benefit by deceptive means
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Types of Tax Crime
Types of Tax Scams
Refund scams
Phishing scams
Phone scams
Recalculation of your tax refund scams
Money Transfer scams
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Types of Tax Crime
Illegal Tobacco Growing and Trading Offshore Dealings
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Role of Taxpayers
Taxpayers can help combat tax evasion and tax crime Any information they provide to the ATO is treated confidentially, and they can remain anonymous if they choose to
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Role of Taxpayers
Voluntary self disclosure Taxpayers who contact the ATO before they are the subject of an audit - and make a full and true disclosure - may be eligible for reduced shortfall penalties
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Role of Taxpayers
Reporting suspected tax evasion/tax crime of third parties The ATO use taxation, privacy and freedom of information legislation to keep tax evasion information and the informant’s identity confidential All information received by the ATO is provided in confidence and is managed according to strict rules, to ensure confidentiality
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