The terms tax fraud, tax evasion and tax avoidance or minimisation are often used interchangeably, but there are important differences between the three categories of conduct.
Tax fraud generally involves making positive representations (statements) to the Australian Taxation Office (ATO) which are false or misleading in material (important) respects, in circumstances where a person or company knows or should know the information is false, and is intended to lead to a gain – such as the receipt of payments to which the person or company is not entitled.
Tax evasion generally involves the less-serious conduct of under-reporting income or over-reporting expenditure, with a view to avoiding some of the tax which the person or company would otherwise be required to pay.
Tax avoidance or minimisation involves the use of lawful methods to reduce tax liability, and does not amount to an offence.
The main tax fraud and evasion offences in Australia are contained in sections 134 and 135 of the Criminal Code Act 1995, which applies across the nation, and the maximum penalties for these offences range from 12 months to 10 years imprisonment.
Tax offences are also contained in the Taxation Administration Act 1953, which also applies nationwide, and the Taxation Administration Act 1996, which is a piece of New South Wales state legislation that prescribes fines-only for these offences.
If you are being reviewed or audited, or have been charges with a tax-related offence, it is crucial to engage the services of defence lawyers who have a comprehensive knowledge of the laws in the area, as well as the guidelines, practices and procedures used by the ATO in making determinations regarding whether to prosecute and, if prosecuted, when to withdraw and downgrade charges.
The team at Sydney Criminal Lawyers is vastly experienced in representing clients who are both suspected and charged with tax fraud and tax evasion-related offences, and will be able to provide you with expert advice and formidable representation throughout the process.
Read on for more information.
The Difference Between Tax Fraud, Tax Evasion and Tax Avoidance
Tax fraud is the common name given to acts or omissions involving representations to the Australian Taxation Office (ATO) in order to obtain a gain for an individual, or a company or other business, to the detriment of the ATO.
These representations will often lead to payments being received to which a person, or a company or other business, is not entitled.
Tax evasion often involves under-reporting of income or over-reporting of expenditure, with a view to reducing tax liability.
Both of these categories of conduct are unlawful.
By contrast, tax minimisation or avoidance involves employing lawful methods to reduce taxation liability.
Tax Fraud and Tax Evasion Offences in Australia
The main offences for prosecuting tax fraud, also known as tax evasion, are contained in the Criminal Code Act 1995 (Cth), which is a piece of legislation that applies across the nation.
Criminal Code Act 1995 (Cth)
Sections 134.1(1), 134.2(1) and 135.4(3) of the Criminal Code Act (the Act) contain most frequently prosecuted tax fraud and tax evasion offences, each of which carry a maximum penalty of 10 years in prison.
Obtaining property by deception
Section 134.1(1) is headed ‘Obtaining property by deception’ and stipulates that a person is guilty of this offence if:
- the person, by a deception, dishonestly obtained property belonging to another with the intention of permanently depriving the other of the property, and
- the property belonged to a Commonwealth entity.
To establish the offence, the prosecution is therefore required to prove each of the following ‘elements’ beyond a reasonable doubt:
- The defendant acted dishonestly, and
- Engaged in a deceptive act, which
- Resulted him or her obtaining property, such as funds or assets,
- That property belonged to a Commonwealth entity, and
- The defendant intended to permanently deprive the owner of the property.
The defendant is not guilty if the prosecution is unable to prove all of those elements.
Obtaining a financial advantage by deception
Section 134.2(1) of the Act is titled ‘Obtaining financial advantage by deception’ and provides that a person is guilty of this offence if:
- the person, by a deception, dishonestly obtained a financial advantage from another person, and
- the other person was a Commonwealth entity.
Conspiracy to defraud
Section 135.4(3) is headed ‘Conspiracy to defraud’ and states that a person is guilty of this offence if:
- the person conspired with another person with the intention of dishonestly causing a loss to a third person, and
- the third person was a Commonwealth entity.
Subsection 135.4(4) makes clear that to be convicted of the offence, it is not necessary for the prosecution to prove that the defendant knew the third person was a Commonwealth entity.
An alternative to the above offences is contained in section 135.2(1) of the Act, which is titled ‘Obtaining financial advantage’ and carries a much lower maximum penalty – 12 months rather than 10 years in.
A person is guilty of obtaining a financial advantage if the prosecution can prove beyond reasonable doubt that:
- the person engaged in conduct as a result of which he or she obtained a financial advantage for himself or herself from another person,
- the person knew or believed he or she was not eligible to receive that financial advantage, and
- the other person was a Commonwealth entity.
Taxation Administration Act 1953 (Cth)
The Taxation Administration Act is another piece of Commonwealth legislation, which means it applies across the nation.
The Act contains both criminal offences for tax-related contraventions that are considered to be serious, as well as administrative penalties for breaches that do not amount to a crime.
Criminal offences in the Act include:
Failing to comply with requirements under taxation law
Section 8C(1) of the Act makes it an offence to refuse or fail, when and as required by taxation law to do any of the following things, among others:
- to give any information or document to the tax commissioner,
- to give information or a document in the manner it is required,
- to lodge an instrument for assessment,
- to produce a book, paper, record or other document, or
- to attend before the commissioner or another person.
Failing to answer questions when attending before the tax commissioner
Section 8D(1) of the Act makes it an offence for a person who attends before the tax commissioner or a delegate to refuse or fail, when and as required by taxation law to do so:
- answer a question, or
- produce a book, paper, record or other document.
The maximum penalty for these offences is 20 Commonwealth penalty units for a first offence, or 40 penalty units for a second or subsequent offence, or where the matter is referred to a court which is satisfied the person has previously been convicted of two or more offences, 12 months in prison and/or a fine of 50 penalty units.
Failing to comply with an order to comply
Section 8H(1) of the Act makes it an offence for a person who is issued with an order to comply under taxation law, to refuse or fail to do so.
The maximum penalty for the offence is 12 months in prison and/or a fine of 50 penalty units.
Administrative penalty provisions
Other types of conduct which can lead to an administrative penalty are contained in Schedule 1 of the Taxation Administration Act 1953, and include:
- Making false or misleading statements about tax-related matters, or taking a position that is not reasonably arguable about a tax-related matter, or the Tax Commissioner being put in a position of having to determine tax-related liability without documents that were required (Division 284),
- Failing to provide a tax-related return, statement, notice or other document by the time required (Division 286), and
- Failing to keep or retain tax-related records, to register or cancel registration, issue a tax invoice, comply with a release authority and other minor contraventions of taxation requirements (Division 286)
The Division contains a method for calculating the amount of the administrative penalty (fine) which assesses the ‘base penalty’ amount and ‘shortfall amount’.
Taxation Administration Act 1996 (NSW)
Prohibited taxation-related conduct is also contained in the Taxation Administration Act 1996, which is a piece of New South Wales state legislation that contains the following offences, among others:
Knowingly giving false or misleading information
Section 55 of the Act creates the offence of making a statement, orally or in writing, to a tax officer, or giving information, orally or in writing, to a tax officer, knowing that it is false or misleading in a material particular.
Deliberately omitting information
Section 56 of the Act makes it an offence to omit from a statement made to a tax officer any matter or thing without which the statement is, to the person’s knowledge, false or misleading in a material particular.
Failing to lodge documents
And section 57 makes it an offence to fail or refuse to lodge a document, statement or return that is required to be lodged by a taxation law.
each of these offences carry a maximum fine of 100 New South Wales penalty units.
At the time of writing, one New South Wales penalty unit is equivalent to $110, making the maximum fine for each offence $11,000.
Penalties for Tax Fraud and Tax Evasion Offences
There are a number of stages the ATO will need to go through before making the serious decision to prosecute an alleged tax offence, and in the event criminal charges are brought it is important to bear in mind the onus always rests on the prosecution to prove every element (ingredient) of the offence beyond a reasonable doubt, as well as to disprove to the same high standard any legal defence/s that may be raised on the evidence.
It is also important to bear in mind that the maximum penalties are reserved for the most serious and egregious conduct.
All of that said, the maximum penalties for some of the most frequently-prosecuted tax offences in Australia are:
Criminal Code Act 1995 (Cth)
|Section||Name of offence||Maximum penalty|
|134.1(1)||Obtaining property by deception||10 years|
|134.2(1)||Obtaining a financial advantage by deception||10 years|
|135.4(3)||Conspiracy to defraud||10 years|
|135.2(1)||General dishonesty||12 months|
Taxation Administration Act 1953 (Cth)
|Section||Name of offence||Maximum court penalty|
|8C(1)||Failing to comply with requirements under taxation law||12 months in prison and/or 50 Commonwealth penalty units|
|8D(1)||Failing to answer questions when attending before the tax commissioner||12 months in prison and/or 50 Commonwealth penalty units|
|8H(1)||Failing to comply with an order to comply||12 months in prison and/or 50 Commonwealth penalty units|
Taxation Administration Act 1996 (NSW)
|Section||Name of offence||Maximum penalty|
|55||Knowingly giving false or misleading information||100 NSW penalty units|
|56||Deliberately omitting information||100 NSW penalty units|
|57||Failing to lodge documents||100 NSW penalty units|
Again, the above are the maximum penalties that apply in the most serious of circumstances, and a person who pleads guilty to, or is found guilty of, a tax fraud or tax evasion offence can receive any of the following:
- Discharge Without Conviction (no criminal record)
- Good behaviour bonds
- Community Correction Order
- Intensive Correction Orders
Tax legislation also contains administrative penalties (fines) for less-serious contraventions of the rules.
Why Choose Sydney Criminal Lawyers®?
Going to court can be nerve-racking, but having a strong and compassionate legal team behind you can make the experience significantly easier to deal with.
Here are 12 reasons to choose our multi-award winning legal team:
Proven Track Record of Exceptional Results
Sydney Criminal Lawyers® consistently achieves outcomes which are in the highest percentile of the Judicial Commission’s sentencing statistics for criminal cases.
Our legal team devises effective case-strategies and fights hard to have cases dropped entirely or charges downgraded – saving clients the time, expense and stress of a defended hearing or jury trial.
Where cases nevertheless proceed, our lawyers have an outstanding track record of winning defended Local Court hearings, and complex jury trials in the District and Supreme Courts.
We also consistently win appeals in the District and Supreme Courts (including the NSWCCA) after clients have received unsatisfactory results with other law firms in the lower courts.We are one of the few firms to achieve successful criminal law appeals in the High Court of Australia.
Where our clients wish to plead guilty, we frequently achieve ‘dismissals’ and ‘non convictions’ in cases where other lawyers have advised there is no chance of doing so.
Highest Level of Client Satisfaction
We have the best and most comprehensive client review record of any law firm in Australia.
Regular communication, accessibility and quality service are our team’s highest priorities.
We are committed to thoroughly explaining all steps involved in the criminal law process, providing regular updates throughout the proceedings, and making ourselves accessible and responsive.
We are passionate about providing an exceptional level of service to our clients, and we fight hard to achieve optimal results in the shortest period of time.
Australia’s Most Awarded Criminal Law Firm
We have received more awards and accolades than any other criminal law firm in Australia. Our team has been awarded “Criminal Defence Firm of the Year in Australia” in a number of prestigious and competitive awards programs for several years running.
The awards recognise our exceptional track record of results, our outstanding client service, the high level of satisfaction we achieve, the affordability of our services and our overall excellence.
We want our clients to know exactly how much their cases will cost from the very start. That’s why we were the first criminal law firm in Australia to publish ‘fixed fees’, back in 2004.
We offer fixed fees for most types of criminal cases and services.Our fixed fees apply to a range of Local Court cases such as drink driving, drug possession, fraud, common assault and AVOs, and also specific services such as prison visits, bail applications, appeals and defended hearings.
Unlike many other law firms, our fixed fees are published on our website – which ensures transparency and certainty.
Free First Appointment
For those who are going to court, we offer a free first conference of up to an hour with one of our Senior Criminal Defence Lawyers.
We also offer a free first conference to those who have received an unsatisfactory result after being represented in court by another law firm, or after representing themselves, and wish to appeal.
Specialist Lawyer Guarantee
We guarantee that only lawyers with substantial criminal defence experience will work on your case and appear for you in court.
This ensures our clients receive the highest quality representation from an experienced, specialist criminal lawyer.
All NSW Courts
From Bombala to Broken Hill, our lawyers appear in courts throughout New South Wales – and across Australia for Commonwealth cases.
And we offer fixed fees for most criminal and traffic law cases throughout the state.
Our entire firm is exclusively dedicated to criminal law – which makes us true specialists.
All of our lawyers have years of experience representing clients in criminal cases, and our principal has been certified by the Law Society of NSW as an Accredited Criminal Law Specialist since 2005.
An ‘Accredited Specialist’ is a lawyer who has practised for at least 5 years in a particular field of law (such as criminal law), has passed a rigorous assessment process conducted by the Law Society of NSW, and has been selected by the Specialist Accreditation Committee of the Law Society as an expert in the field.
Accredited Specialists are required to undertake more training each year than other lawyers and must be successful in having their accreditation renewed every year. Specialist Accreditation is the mark of a true specialist.
Our firm’s specialist experience ensures you receive the best possible result, whatever your criminal law case may be.
Results-Focused Law Firm
Our team is passionate about achieving results, and unlike many other law firms, our lawyers do not have monthly financial ‘budgets’ to meet.
The absence of budgets means our lawyers are entirely focused on achieving optimal results in the shortest space of time; whether by getting charges dropped or downgraded at an early stage or having cases ‘thrown out of court’.
Not having budgets also means our lawyers are not under pressure to engage in unscrupulous practices such as unnecessarily adjourning cases or ‘overcharging’ clients – which, sadly, is a common complaint against many other lawyers and law firms.
No budgets encourages regular consultation between lawyers within the firm – promoting an ‘open door’, team environment where lawyers bounce ideas off one another, formulate case strategy together and benefit from each other’s specialised experience, methods, techniques and insights.
The result is a firm which delivers optimal outcomes in the shortest time periods, at the least expense and stress to our clients.
Team of Lawyers Behind You
Our clients benefit from the pool of knowledge that only an extensive team of experienced criminal defence lawyers can provide.
Our lawyers regularly consult one another to stay ‘ahead of the pack’ in the ever-changing field of criminal law – constantly devising, refining and implementing specialised techniques which ensure our clients achieve the best possible outcomes.
A team approach is particularly important when it comes to serious criminal cases such as murder, commercial drug cases, serious and sexual assaults, large-scale fraud, robbery and other ‘indictable’ cases.
In such matters, clients reap the benefits of several lawyers devising and executing case strategies which maximise the chances of having cases dropped or downgraded at an early stage, or ‘thrown out of court’ – often saving clients a great deal of cost, time and anxiety.
Familiar with Magistrates and Judges
Each of our lawyers appears in court on a daily basis, and has done so for years. We have therefore been able to develop an understanding of, and rapport with, magistrates and judges in Sydney and indeed across the state.
Our team’s extensive experience before the courts ensures your case is tailored to the specific nuances of individual judicial officers, maximising the likelihood of a favourable result.
We have offices in locations across the Sydney Metropolitan Area and beyond, including:
- the Sydney CBD, on Castlereagh Street, directly opposite Downing Centre Court,
- Parramatta, opposite the Justice Precinct carpark,
- Liverpool, and
We offer free parking at our Sydney CBD offices, and all of our offices are close to train stations and bus terminals.
For those who are unable to attend our offices, we offer conferences by telephone, Skye and FaceTime anywhere around the world.
If you are going to court and wish to arrange a free first consultation, call our 24 hour hotline on (02) 9261 8881 or send us an email at firstname.lastname@example.org.
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