Tax crimes pose a serious threat to the country, as they hinder the distribution of services, goods, and other resources to the community. In this regard, it is important for you to know your way around the tax system to avoid violating the laws around it and to become an advocate for it.
Tax evasion and tax fraud
As the top forms of tax crimes, tax evasion and tax fraud are linked to bigger crimes that are committed even by top officials in the government. It is for this reason that the investigations against these crimes are extensive to the point that the country makes use of external resources and assistance.
Tax evasion vs tax avoidance
Whilst tax evasion is illegal, tax avoidance is not. Tax evasion is the illegal practice of not paying taxes by not paying the taxes owed; reporting taxes that are not allowed legally; and not reporting income. It can apply to employment taxes, sales taxes, and income taxes.
On the other hand, tax avoidance is a legitimate way of minimising taxes through methods indicated in the tax law. Businesses can avoid taxes by availing of all legal deductions and by sheltering income from tax payments through the establishment of employee retirement plans and other legitimate means.
The crime, the perpetrators, and the penalties
Australian tax laws clearly state that abusing the tax system, the revenue, and the super systems for personal interests are punishable by law, for they hinder the distribution of the collected revenue to the community.
A tax law is violated in many ways by an individual or a group of people. Those who deliberately hide their wages or file false claims to avoid paying their taxes are violating the law. Government officials who manipulate the tax system by using their administrative position to claim benefits and payments they are not entitled to are also violating the law. In this regard, everyone who is required to pay their taxes can violate the law.
It is also important to be aware that people who are caught violating tax laws may not be aware of the crime themselves because they are also victims. This is the case with people being targeted for identity crimes.
Australia has extensive procedures for tackling these criminal cases to ensure the generation of revenues for the fulfillment of the government’s responsibilities to the Australian people.
The penalties for these misconducts are imposed according to the level of the crime committed. They include the following:
- Good Behavior or Security Bond
- Community Service
- Prison Sentences
Convictions for these crimes can also jeopardise or tarnish people’s career, credibility, stature, and ability to travel around the world.
Tax crime investigations
The Australian government, law agencies, and other legal organisations work together to track tax law perpetrators in order to trace their crimes and to convict them. Investigations rely mainly on revenue audit, monitoring, and evaluation to determine anomalies in the tax collection and super systems.
Auditing is in the front lines of the battle against tax crimes by way of financial examination and the inspection of individuals’ and organisations’ accounts to determine if they are abiding by the law.
The investigation commences with a preliminary analysis, which enables authorities to fully understand the crime committed and the people involved. The investigators are then assigned to tackle specific tax crimes to establish core priorities and to avoid any conflict of interest.
The Australian Taxation Office (ATO) is at the helm when it comes to tax crimes investigations. If you’re being investigated, whether you are guilty or falsely accused, the ATO may enter your premises and gather important tax documents. In this regard, you must be aware of your rights and never allow anyone to enter and search your premises for traces of tax crimes without a warrant.
ATO and its agents are not above self-incrimination, so don’t feel any urgency to answer questions if they don’t have a warrant. It is important to speak to a legal advisor or your external professional accounting advisors on how to move forward if you are being investigated. This information is vital, especially for people who are wrongly accused of a crime and are being harassed by officials and other personnel.
Accidental tax crimes
Some people are committing tax crimes and are not even aware of it. It is important to abide by the system and it is best to think ahead. Here are some tips on how you can avoid committing accidental tax crimes:
- File your taxes and tax returns early
- Integrate a fraud alert or credit freeze in your credit file or profile
- Learn about the different forms of scams and identity theft
- Protect your personal identity and information at all cost
- Regularly check your tax file and account to make sure no anomalies are taking place
- Hire honest and efficient accounting advisors to help you with your taxes.
The battle against tax crimes
Australia tackles tax crimes efficiently by handing out rules and restrictions to various payment processes and business operations like Cross-Border Payments, Tax on Business Operations, Capital Gains, Overseas Profits and Outsourcing, Commercial Real Estate Taxation, and others.
The Australian Taxation Office (ATO) takes the lead in battling tax crimes in and out of Australia. The ATO works with other offices and departments under the Australian government, such as the Inspector General of Taxation, Board of Taxation, and Tax Practitioner Board. Australia also established the Serious Financial Crime Taskforce (SFCT) under the Australian Federal Police to target financial crimes.
The Australian tax law is extensive; thus, enabling the country to battle tax crimes and ensure the progressive flow of the country’s revenue. Learn more about the tax law to ensure that you abide by it. If you have questions or are involved in a tax investigation or tax crime, contact our team today.