Penalties for tax fraud in Australia
It’s not surprising that the government, through the Australian Taxation Office (ATO), strictly enforces tax laws and punishes tax crimes.
According to the ATO, deliberate acts that abuse the tax and super systems are considered as tax crimes – they incur serious consequences since they are punishable under tax and criminal law. These include:
- Failure to lodge a tax return on time
- Making a false or misleading statement (deception)
- Hiding cash wages
- Making fraudulent rebate and offset claims
- Using complex offshore arrangements to hide income
- Failure to meet other tax obligations
- Failure to keep necessary tax records
- Failure to withhold PAYG withholding amount from employees or entities, as required
Tax penalties
Offenders are notified of their tax offence and are given a chance to explain and defend themselves in court. Should the court find the defendant guilty of dishonesty or deception, the offender will be required to pay a tax penalty and may be imprisoned for up to 10 years, depending on the crime.
Penalty relief
The ATO offers penalty relief for eligible entities who may simply have made mistakes in their tax returns but not those who the office deems to have deliberately attempted to commit tax fraud.
Eligibility for penalty relief
Individuals and entities with a turnover less than $10 million may benefit from the penalty relief.
For entities to be eligible for the tax penalty relief, they must be:
- Co-operatives
- Not-for-profit organisations
- Strata title bodies
- Small businesses
- Self-managed super funds
You cannot apply for the penalty relief – the ATO will automatically apply it to eligible entities. However, even such entities may lose their eligibility if they received a penalty relief or had been penalised in the past three years.
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