Advanced Income Tax Law © National Core Accounting Publications

Tax Crime and Compliance Issues Chapter 20 Tax Crime and Compliance Issues © National Core Accounting Publications

© National Core Accounting Publications Tax Crime Tax crime is criminal behaviour designed to evade tax obligations by fraudulently use the system to obtain an improper financial benefit. Criminal attacks on the tax system can be made by individuals and organised groups both from within and beyond Australia’s jurisdiction. © National Core Accounting Publications

© National Core Accounting Publications Tax Crime The most common methods of attack are: Identity crime Secret offshore dealings High volume low suspect transactions Credit and debit card fraud Illicit tobacco growing and trading © National Core Accounting Publications

© National Core Accounting Publications Tax Crime Tax Crime and the ATO The ATO takes firm action against taxpayers, intermediaries and others who engage in tax crime.   As tax crime is often associated with other crimes, the ATO co-operates with other agencies to investigate serious breaches. © National Core Accounting Publications

© National Core Accounting Publications Project Wickenby Project Wickenby is an ongoing multi-agency taskforce involving: the Australian Federal Police the Australian Taxation Office the Australian Crime Commission the Australian Securities and Investments Commission Australian Transaction Reports and Analysis Centre Attorney-General’s Department Australian Government Solicitor the Commonwealth Director of Public Prosecutions © National Core Accounting Publications

© National Core Accounting Publications Project Wickenby aims to protect the integrity of Australian financial and regulatory systems by preventing people from promoting or participating in the abuse of tax or secrecy havens. Project Wickenby deals with the abusive use of secrecy havens which includes, but is not limited to, arrangements involving false deductions and concealed income and gains. © National Core Accounting Publications

© National Core Accounting Publications Project Wickenby The key objectives of the Project Wickenby task force are to: reduce international tax evasion in the Australian taxation system. enhance strategies and capabilities of Australian and international agencies to collectively detect, deter, deal with and disrupt international tax evasion and money laundering. improve community confidence in Australia’s regulatory systems. reform administrative practice, policy and legislation. © National Core Accounting Publications

© National Core Accounting Publications Project Wickenby The Project Wickenby taskforce works with Australian and international agencies to detect, deter and deal with: tax avoidance and evasion breaches of financial laws and regulations attempts to defraud the community money laundering concealment of income or assets © National Core Accounting Publications

© National Core Accounting Publications Project Wickenby Works with governments and organisations around the world to fight financial crime on a global scale by: accessing information and resources from foreign governments to assist with criminal investigations and prosecutions. sharing information, strategies and intelligence gathering and information sharing with international organisations and foreign tax administrations. © National Core Accounting Publications

© National Core Accounting Publications Targeting Tax Crime Protecting honest taxpayers from those who would abuse the community’s tax system is a high priority for the ATO. When tax crimes have been committed the ATO will seek to bring those offenders to account. © National Core Accounting Publications

© National Core Accounting Publications Types of Tax Crime Tax Refund Fraud by Organised Crime Other Fraud and Evasion Cash Economy © National Core Accounting Publications

© National Core Accounting Publications Types of Tax Crime ATO review techniques To make it harder for dishonest operators to get away with not reporting cash income the ATO has developed performance benchmarks which make it clear what is expected from businesses in a range of industries. © National Core Accounting Publications

© National Core Accounting Publications Types of Tax Crime ATO review techniques The ATO looks at ratios of: cost of goods sold to turnover labour to turnover rent to turnover GST-free sales to turnover motor vehicle expenses to turnover © National Core Accounting Publications

© National Core Accounting Publications Types of Tax Crime Scams A scam is a fraudulent invitation, request, notification or offer designed to obtain someone’s personal information or money, or otherwise obtain a financial benefit by deceptive means. © National Core Accounting Publications

© National Core Accounting Publications Types of Tax Crime Types of Tax Scams Refund scams Phishing scams Phone scams Recalculation of your tax refund email scams Money Transfer scams © National Core Accounting Publications

© National Core Accounting Publications Types of Tax Crime Email scam example © National Core Accounting Publications

ATO Compliance Strategies The ATO state that they encourage taxpayers to “do the right thing” and want to make it as easy as possible for them to do so. Its compliance strategies are designed to help taxpayers comply voluntarily. © National Core Accounting Publications

ATO Compliance Strategies Compliance Pyramid © National Core Accounting Publications

© National Core Accounting Publications Types of Tax Crime Illegal Tobacco Growing and Trading Offshore Dealings © National Core Accounting Publications

© National Core Accounting Publications Role of Taxpayers Taxpayers can help combat tax evasion and tax crime. Any information they provide to the ATO is treated confidentially, and they can remain anonymous if they choose to. © National Core Accounting Publications

© National Core Accounting Publications Role of Taxpayers Voluntary self-disclosure Taxpayers who contact the ATO before they are the subject of an audit - and make a full and true disclosure - may be eligible for reduced shortfall penalties. © National Core Accounting Publications

© National Core Accounting Publications Role of Taxpayers Reporting suspected tax evasion/tax crime of third parties The ATO use taxation, privacy and freedom of information legislation to keep tax evasion information and the informant’s identity confidential. All information received by the ATO is provided in confidence and is managed according to strict rules, to ensure confidentiality. © National Core Accounting Publications