Tag: compliance

Third arrest over multi-million dollar tax fraud

Tuesday, 12 August 2008

The Australian Federal Police (AFP) has charged a 56-year-old man over a multi-million dollar offshore tax avoidance scheme.

Federal agents arrested the Queensland man yesterday afternoon soon after he arrived in Australia on a flight from Vanuatu.

The AFP will allege the man promoted an asset stripping scheme designed to leave Australian companies in a position unable to pay their tax liabilities.

The alleged fraud involved the promotion of tax avoidance through an intricate network of companies in Australia and Vanuatu.

The AFP investigation began after a referral from the Australian Tax Office, which is investigating offshore tax evasion schemes.

AFP National Manager Economic and Special Operations Warren Gray said the joint investigation has identified 69 companies from Queensland, NSW, Victoria, South Australia and the ACT as participants in the asset stripping arrangement, which involves tax fraud in excess of $10 million.

“This operation pre-dates Project Wickenby but it is another example of how the AFP, in concert with its Project Wickenby partners, continues to focus on arrangements involving offshore secrecy havens and money laundering, to ensure those involved pay their fair share of tax,” Commander Gray said.

Two men were arrested in May and are currently before the courts on charges relating to the scheme.

The man was bailed to appear at Maroochydore Magistrates Court on Thursday 14 August charged with conspiracy to defraud the Commonwealth under Section 86(2) of the Crimes Act 1914.

This offence carries a maximum penalty of 20 years imprisonment and/or a fine of $220,000.

ATO latest compliance program released

The ATO annual compliance program serves as a fair warning to all taxpayers, CPA Australia has said.

CPA Australia CEO Geoff Rankin said the ATO’s 2008 – 2009 compliance crackdown gave taxpayers, especially individuals and smaller enterprises, ample time and information to ensure their tax affairs were in order.

‘The program acknowledges the complexity and scope of the Australian tax system while aiming to ensure that all taxable entities are compliant,’ he said.

‘The system’s complexity is such that 73 per cent of individuals and 95 per cent of businesses now see a registered tax agent.

The compliance program is a timely reminder for businesses and individuals to speak to a qualified CPA tax agent where necessary to ensure their affairs are in order.
‘The compliance program’s approach which emphasises education, information and transparency as opposed to being purely punitive is a positive step. Nevertheless the program will utilise the technology and resources available to the ATO to ensure compliance and collect tax revenue due.’

Mr Rankin said the focus on smaller enterprises, ‘mum and dad’ investors, international transactions and individuals, meant reviewing and modifying behaviour where necessary was crucial.

‘Individuals, smaller enterprises and smaller investors, including those with offshore transactions, must take care in ensuring their affairs are in order. The complexity of some of these affected transactions means some taxation requirements may sometimes be overlooked but the need to be thorough, from a compliance viewpoint, has never been greater.’

The annual compliance program will focus on the following areas among others:

* investors (undisclosed capital gains including gains from disposing of assets to invest in superannuation)
* international transactions (using technology and agreements with international authorities to verify tax compliance of international transactions)

  • undeclared income (particular emphasis on partners and beneficiaries who have not returned their share of partnership or trust income)
  • work related expenses (focus on occupations with a pattern of rising claims)
  • cash economy (ATO will contact 50,000 businesses to inquire about their cash economy activity and conduct 5000 reviews)
  • rental property deductions (under-reporting of rental income and over reporting of deductions

‘The increasing use of sophisticated technology allows the ATO increased access to data and a greater capacity for data matching to determine compliance for a wide range of transactions. In 2007 – 2008 the ATO received around 78 million income records to ensure assessable income was correctly returned,’ Mr Rankin said.

‘While individuals and entities are being given every opportunity to comply, the penalties for non-compliance are high so if unclear as to your status speak to a CPA

Tax targets for the next year

ATO second commissioner Jennie Granger has given an ‘early bird’ view of some of the areas that the ATO’s Compliance Program 2008 – 2009 will be addressing, and an overview of the ATO’s tax time focus for individuals and small business. She said:

· for tax time this year, the ATO will be paying particular attention to:

o investors, particularly rental properties, dividends and interest, sale of investments, avoiding dodgy tax schemes, saving for retirement

o salary packages of executives and directors – the ATO will expand its review of highly paid executives and directors, generally people with income over $1 million

o employees and their work expense claims – the ATO will look at the growth in work expense claims particularly by nurses, medical practitioners and chefs

· the ATO will also be expanding its coverage of income tax issues this year. This includes: sale of assets and investments, foreign source income, and employer obligations (including superannuation).