The newest development in the war against tax crime has seen the Australian Crime Commission enter into a $2 million two-year contract with the Australian Taxation office to supply static and mobile surveillance to catch out tax cheats.
In what may seem like a plot straight out of a James Bond movie, the ACC is planning on providing static and mobile surveillance and their expertise to assist the ATO in addressing the highest tax crime priorities.
This pretty much paints a picture of undercover vans with satellite dishes parked on the street and men in dark glasses and uniforms coming to drag people away from their homes into said vans. However, before you start checking your plants for hidden cameras, we’ve listed the main areas the surveillance team will be looking into:
International Tax Evasion
Individuals or companies that promote or participate in schemes that abuse the Australian tax system by relying on the secrecy provisions of overseas jurisdictions or “tax havens” to hide money offshore are a definite target of this task force. The original task force (Project Wickenby) behind this venture was actually established in 2006 and its purpose was to fight against tax evasion and protect the integrity of Australia’s financial and regulatory systems.
Refund fraud occurs when people deliberately and dishonestly claim refund, rebates or offset from the ATO that they are not entitled to claim. Some examples include:
- Purposely over-claiming deductions, offsets or expenses by providing false or misleading information
- Understating income or providing fictitious payment summary details
- Providing false information in a business activity statement
- Making claims through fraudulent registrations or using false or stolen identities
The ATO and ACC will be seeking out these fraudulent activities via various means, including using analytical models that use behavioural and statistical algorithms to analyse information on income tax returns, business activity statements and other tax forms lodged. Additionally, the ATO will be using shared data systems and information obtained about suspected fraud from the community and other government agencies to tighten its grip on refund fraud.
The cash economy occurs when businesses purposely hide income to avoid paying tax, often by not declaring their cash transactions. These activities include:
- Paying ‘cash-in-hand” wages and not withholding tax or super
- Skimming some or all of the cash takings
- Running part of normal business activities as “off the books”
- Not reporting the value of goods and services provided in exchange for other goods and services
- Avoiding tax and super obligations by not registering the business or lodging returns
Fraudulent ‘phoenix’ activities
These types of activities occur when a company goes into liquidation, leaves its debts behind, while assets are shifted into a new entity that begins trading again, often controlled by the same person or group of individuals, with a very similar name and free of the debts. This deliberate, systematic procedure is an extremely fraudulent exercise that participants undertake in order to avoid paying tax and other debts.
To curb this practice, the director penalty regime has been implemented to target directors of companies that do not meet their PAYG withholding and super guarantee obligations. It makes directors personally responsible if they don’t ensure their company meets certain tax obligations.
Tax avoidance schemes
Contemporary tax avoidance schemes can be highly sophisticated and are not always easily recognised. These schemes include tax benefits that are outside the letter or the intent of the law. The taxpayers and promoters of these arrangements, who deliberately use these schemes to avoid paying tax, are under heavy scrutiny.
While the ATO do take into account that most people do the right thing, it is important to ensure you are complying with Australian Tax Law. If you are unsure of whether you are participating in any of the above activities or for more information, contact us on 02 9299 7044 or via firstname.lastname@example.org for a confidential discussion.