Some Australian taxpayers misuse the tax and superannuation systems to receive financial benefits. The ATO is committed to preventing, identifying and bringing the tax perpetrators and financial crime into consideration. Let’s know more about tax evasion.
What is tax evasion?
Tax evasion includes omission or blameworthy acts by the taxpayer. Tax fraud involves the taxpayer making a false statement to the Australian Taxation Office about their tax. The following are some examples of tax evasion or fraud:
- Claiming tax deductions that the taxpayers were not eligible for
- Failing to maintain records or withholding information from the Commissioner
- Submitting backdated, false or altered documents
- Paying cash wages and not reporting the wages paid to the ATO
- Not remitting Pay As You Go Withholding tax, GST, or Superannuation Guarantee charges to the ATO
- Making false statements
- Hiding expenses are used for personal benefit as business expenses.
If proof indicates that a taxpayer has acted intentionally or unintentionally to get a refund or payment from the ATO, then the ATO will make a referral for criminal investigation and prosecution. Moreover, if you are unaware of tax rules and regulations, it would be worth considering a tax agent in Melbourne.
Does the ATO investigate tax evasion?
The ATO is committed to dealing with illegal acts and behaviours of concern when it comes to shadow economy, phoenix, and tax evasion to protect honest communities and businesses.
What is money laundering in Australia?
Money laundering includes two main aspects:
- The process by which illegally received funds are shown as receiving legally
- The usage of funds (either illegally received or legitimate) as an instrument of crime.
Money laundering is a major aspect of virtual criminal activities and can affect the Australian community in several ways. It reduces tax revenue and weakens the control of government over the economy.
What are indications of financial crime?
When committing financial crimes, people hide or misrepresent the actual purpose of their assets, transactions, or ownership of entities. Some of the indicators the ATO looks for include:
- use of straw directors or nominees
- Unexpected wealth that is at odds with their reported income
- giving misleading or false statements to the ATO
- misrepresenting the true nature of transactions
- understating income
- claiming tax deductions you are not liable to
- maintaining two sets of financial statements or books
- failing to maintain records or destroying financial records intentionally
- hiding money or the source of income
- paying wages in cash
- using imaginary names or unauthorised names of third parties
- failing to file income tax returns or BAS
- failing to pay tax debts on the due date
- withholding information from the ATO or a tax professional
- ignoring legal guidance or advice from the ATO.
Penalties for making false or misleading statements
- Misleading or false statement penalty – shortfall amount
You are required to pay a penalty if you make a misleading or false statement that may lead you to have a shortfall amount.
- Misleading or false statement penalty – no shortfall amount
You will have to pay this penalty if you make a misleading or false statement that doesn’t lead you to have a shortfall amount.
- Penalty for not making a statement
You are subject to a penalty of 75% of tax-related liability if both of the following conditions apply:
- You fail to submit a document for your tax-related liability by the due date
- If that document is not submitted, the ATO will determine your tax-related liability.
- Penalty for taking a position on income tax or PRRT that is not reasonably arguable
If you apply an income tax or petroleum resource rent tax (PRRT) law in a way that cannot be reasonably argued, and as a result, the shortfall amount exceeds a certain threshold, you will be responsible for a base penalty of 25% of the shortfall amount.
Conclusion
The blog outlines basic information regarding tax evasion, tax fraud, and possible penalties for making false or misleading statements. To avoid paying penalties, it’s recommended to receive help from Reliable Melbourne Accountants.
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