ATO cracks down: Almost 500 companies and individuals convicted of tax, super offences in September quarter

Almost 500 companies and individuals were convicted in the September quarter for taxation and superannuation offences, an increase of 20%, and 12 people were sentenced to jail, for a maximum of five years.

According to the Australian Taxation Office, there were 478 prosecutions for taxation and super offences over the three months to September 30. This is well up on the previous corresponding quarter’s number of 398.

The 356 people and 122 companies were prosecuted for a variety of offences, including non-lodgement of forms and receiving a fee for preparing an income tax return on behalf of a taxpayer while not being a registered tax agent, the ATO said.

Convictions included:

• A New South Wales concreting business owner fined $17,000 for 21 offences for failing to comply with court orders to lodge quarterly business activity statements.
• An Australian Capital Territory bus driver fined a total of $6,600 for three offences for failing to comply with court orders to lodge income tax returns.
• A senior partner in a NSW partnership was fined $8,500 in total for seven offences for failing to lodge GST returns and four offences for failing to lodge income tax returns.
• A NSW building construction company fined $16,000 for 10 offences for failing to lodge income tax returns.
• A NSW plumbing company fined $22,000 for 16 offences for failing to comply with court orders to lodge four income tax returns and four GST returns.

The ATO also said 12 people received custodial sentences over the period, ranging from a few months to five years.

Nine were prosecuted for goods and services tax and excise-related fraud, and collectively were sentenced to more than 16 years’ imprisonment.

These included a company director from Western Australia who understated cash business sales by more than $5.6 million with intent to underpay GST obligations by $514,000 for two companies. The individual was sentenced to three years’ jail.

Another director, this time from a NSW stockbroking business, was jailed for four-and-a-half years for claiming false GST input tax creditors, after submitting 23 fraudulent business activity statements and attempted fraud of almost $1 million.

Separately, two accountants from NSW and Queensland were prosecuted for income tax related fraud offences and sentenced to a collective six-and-a-half years jail.

The longest sentence was given to a Sydney man with a background in commerce, who was sentenced to five years’ jail for deliberately lodging 41 false income tax returns totalling $180,000.

Another Sydney resident, this time a fencing contractor who made false statement in his business activity statements, was fined $18,000 this year and ordered to pay an additional $17,319 to the commissioner, the ATO said.

Acting tax commissioner Jennie Granger says those caught face “extremely serious penalties including criminal conviction, significant fines and imprisonment”.

“Even if penalties do not include jail time a criminal conviction will mean a permanent criminal record. As well as disqualifying you from many kinds of employment this can impact on other areas of your life including restricting travel to some countries,” Granger says.

She added that the ATO was focusing on refund fraud, which is attempting to obtain a tax return dishonestly by deception or other means. Methods include:

• Making claims using false or stolen identities.
• Deliberately over-claiming deductions, offsets or expenses, by providing false or misleading information.
• Understating income and/or fictitious payment summary details.
• Intermediaries deliberately lodging false claims on behalf of clients (with and without client knowledge).
• Fraudulent returns prepared by people acting as tax agents who are not actually registered.
• Scams where people are tricked into giving away personal details.

Yasser El-Ansary, Institute of Chartered Accountants in Australia tax counsel, says the ATO will likely “devote even more of its horsepower to prosecuting these crimes in the future.”

“Nowadays, it’s a question of when you get caught,” El-Ansary says, citing the ATO’s electronic data-matching and improved intelligence gathering.

“The ATO has no reservations in bringing the full force of the law.”

CPA Australia’s recent small business survey showed that in 2011, 21% of Australian small businesses that borrowed did so to cover tax payments, well up from 8% the year before and 11% in 2009.