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Penalties for tax fraud in Australia

  • February 07 2020
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Penalties for tax fraud in Australia

By Louise Chan
February 07 2020

Public taxes are used to fund government projects in relation to health, defence, infrastructure and many other national and local projects that require public funding. 

Penalties for tax fraud in Australia

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  • February 07 2020
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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. 

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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.

Penalties for tax fraud in Australia
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About the author

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Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

About the author

Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

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