Tax law in Australia is extremely specific about what type of conduct constitutes a criminal act. The most common taxation offences provided for under Commonwealth Legislation include obtaining a financial advantage, tax fraud, conspiracy to defraud, and tax evasion. Each of these is a crime in its own right, violating a specific section of the Criminal Code Act 1995 (Cth) (‘the Act’) and thus subject to criminal investigation and prosecution.
Understanding which crime falls under which section of the Act and what penalties may be imposed on violators can help you understand the massive risk you take when engaging in any form of tax evasion or fraud. This can also help you determine if you need the assistance of a financial expert to put your affairs in order, or of a law firm to defend you against allegations of a criminal act against the Commonwealth or other taxpayers.
The most common offences are fairly straightforward, and typically not committed by accident. However, if you think you may have inadvertently committed a crime, you should contact a lawyer directly.
If you simply misfiled a tax return, or an error was made leaving you with unpaid taxes, it may be a simple matter to resolve, with a lower chance of serious liability. Deliberate fraud or false statements, on the other hand, can lead to charges of tax evasion. Punishment under Australian law can be severe for tax fraud.
The main offences for prosecuting tax evasion are contained in sections 134.1(1), 134.2(1), 135.2(1), and 135.4(3) and (4) of the Act.
Section 134.1(1): Obtaining property by deception
The Commonwealth may allege an offence under this section if you used deception to dishonestly obtain property belonging to a Commonwealth entity, and that you intended to permanently deprive the Commonwealth of that property.
“Property” is generally defined as the funds owed in tax, but can also be other financial assets. In other words, failing to pay taxes by way of falsifying information in your tax return can be construed as obtaining property by deception.
In light of these considerations, the prosecution must prove beyond a reasonable doubt both that your actions were deliberately deceptive and that they resulted in your obtaining property, such as funds or financial assets that would otherwise belong to a Commonwealth entity.
If any one of these elements is unproven by the prosecution, you would be found not guilty of this form of tax evasion. If you are found guilty of obtaining property by deception, the maximum sentence is ten years in prison under the act.
Section 134.2(1): Obtaining financial advantage by deception
The Commonwealth may allege an offence under this section if it is suspected that you used deception to dishonestly obtain a financial advantage from a Commonwealth entity.
The prosecution must prove two elements beyond reasonable doubt. First, that your actions were deliberately deceptive. Secondly, that these actions resulted in you gaining a financial advantage from a Commonwealth entity. Common examples of this offence include claiming a benefit you are not entitled to for yourself or another taxpayer.
If the prosecution fails to meet the burden of proof for any of these two elements, you would be found not guilty of this form of tax evasion. However, if you are found guilty of obtaining financial advantage by deception, the maximum sentence is ten years in prison under the Act.
Section 135.2(1): Obtaining financial advantage
This criminal offence is an alternative to the more serious section 134.2(1) offence and may be alleged against you if it is suspected that you obtained a financial advantage from a Commonwealth entity.
The prosecution must prove two elements beyond reasonable doubt. First, that you knew or believed you were not eligible to receive the financial advantage. Secondly, that you deliberately engaged in conduct that resulted in obtaining a financial advantage for yourself from a Commonwealth entity.
If the prosecution fails to meet the burden of proof for any of these two elements, you would be found not guilty of this form of tax evasion. If you were found guilty of this offence, the maximum sentence is twelve months in prison. This is significantly lower than the maximum sentence of ten years imprisonment under section 134.2(1) as discussed above.
If the prosecution case for tax fraud appears to be strong, your defence lawyer is likely to attempt to have the more serious offence under section 134.2(1) withdrawn and substituted with the less serious offence under section 135.2(1). This would reduce the maximum sentence the Court can impose on you from ten years to twelve months.
Section 135.4(3): Conspiracy to defraud
This criminal offence may be brought if it is suspected that you conspired with another person with the intent to dishonestly cause a loss to a Commonwealth entity.
Under section 135.4, the prosecution does not have to prove that you had knowledge that the defrauded party was a Commonwealth entity. Both you and any other offender involved in the conspiracy may share joint liability.
If you are found guilty of conspiracy to defraud, the maximum sentence is ten years in prison.
There are certain things you can do to avoid investigation by the taxation office. These include but are not limited to keeping your bank accounts in order, maintaining appropriate disclosure to authorities, and filing your taxes truthfully and in a timely manner. If you face criminal prosecution for tax evasion, the team from Beavon Lawyers in Brisbane can help you deal with charges of tax evasion.