Wealthy Australians Could Face Tax Evasion Penalties


A number of well-off Australians could face tax evasion penalties in the near future as the ATO has pledged to crack down on wealthy tax dodgers. The ATO is threatening heavy penalties to those who are found to owe substantial amounts in unpaid taxes, including imprisonment. With the ATO estimating that it is owed more than $4 billion by wealthy tax evaders, it’s likely that investigators will be highly motivated to recover the money wherever possible.

This recent crackdown follows the signing of a number of treaties between Australia and other countries with the aim of finding tax evaders who try to hide money offshore as a way to avoid paying taxes in Australia. Previously, it has been difficult for the ATO to track money that had been sent offshore, but once the treaties come into effect, the tax office is expected to make it harder for people to hide money in offshore tax havens like Switzerland.

Since the ATO has signed the tax treaties with other countries, an estimated $1.5 billion in unpaid taxes has already been recovered.

Vehicle records to be examined

As well as working with offshore banks and financial institutions, the ATO has just announced that it will be examining the records of vehicle sales over the previous three years to identify people who buy cars that are beyond their means.

The investigation will match tax records with state records to highlight people who have been dodging their tax and super obligations, as well as checking taxpayers who may have purchased vehicles not consistent with their declared income.

What are the penalties for tax evasion?

If caught, Australian tax evaders can face harsh penalties. Tax evasion is usually dealt with under the Commonwealth Criminal Code Act and due to the fact that the government is keen to deter people from committing tax fraud, the penalties can be extremely harsh.

In previous cases that the ATO has pursued in recent years, those found guilty of tax fraud have been required to pay their outstanding tax bills and any interest charges that were applicable. Some of the tax bills that the ATO has sent people have amounted to millions of dollars, as in the case of a share trader who claimed an income of $0 yet was discovered to have luxury cars worth $360,000 and was found to be concealing money in the British Virgin Islands. He was required to repay taxes of $14 million to the ATO.

In another case last year, a man who claimed an income of $5,000 to $87,000 was found to have bought a mansion worth $15 million and was required to pay a tax bill of $10 million.

As there is currently no specific offence for tax fraud, those who fall foul of the ATO are usually charged with obtaining a financial advantage against a Commonwealth entity. In its recent attempts to catch tax fraud perpetrators, the ATO has stated that it will refer serious cases to the Australian Federal Police to be treated as fraud cases and criminally prosecuted. This is likely to lead to more people being charged and taken through the criminal courts.

If a person is found guilty of tax evasion, they will usually be required to repay the amount of tax outstanding, in some cases with interest. They will also face other penalties like good behaviour bonds, community service or even imprisonment.

Even if the penalty isn’t too harsh, having a criminal conviction for tax evasion can impact on certain career choices, and make travel to certain countries difficult in the future. A good criminal lawyer is essential if you intend to plead not guilty to charges of dishonestly obtaining an advantage from a Commonwealth entity.

What does the prosecution need to prove?

There are a certain number of things the prosecution will need to prove in order to successfully convict you of tax evasion. One important thing the prosecution will need to be able to prove beyond a reasonable doubt is that you knowingly obtained a financial advantage for yourself, and that it wasn’t just through an oversight. They will also have to show that you did obtain an advantage and that it was done knowingly, through your conduct.

Tax cases can be complicated and if you intend to fight the ATO it’s important to have an experienced legal team that knows how to scrutinise the prosecution case and thoroughly prepare your defence. Criminal defence lawyers who are experienced in defending tax fraud cases may be able to have the case against you withdrawn before it gets to a defended hearing or jury trial by highlighting deficiencies in the prosecution case or identifying any legal defences that you may have. Alternatively, they may be able to reduce the number and seriousness of the charges so that you receive the most lenient penalty.


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About Ugur Nedim

Ugur Nedim is an Accredited Specialist Criminal Lawyer and Principal at Sydney Criminal Lawyers, Sydney's leading firm of criminal and traffic defence lawyers.
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