Privately owned and wealthy groups – Young entrepreneur, recently wealthy
‘My focus is on keeping my money and building wealth and my reputation. Taking risks is the way I do business. I want to avoid paying any tax at all.’
Late last year, a tech company bought my genius software for $200 million. I’m a risk taker and I always make sure I pay the least amount of tax possible, if any at all. I worked hard to make this money and I don’t want the taxman to take it.
My wife and I celebrated with a holiday to Las Vegas. I bought a new car, a waterfront home and a vintage Rolex. We were living the high life.
I approached my old school friend Greg who is an advisor; he always had ideas to help his clients keep what’s theirs. He’d been involved with some high profile stuff and I knew that he’d do all he could to ensure I kept my hard earned profits.
Greg developed an arrangement to ensure I did keep all my money. What I didn’t know was that Greg was being investigated by the ATO and the Australian Federal Police (AFP) for advising on this arrangement elsewhere. A few days after my return was lodged by my normal accountant, the AFP turned up with a warrant and raided my home. They took my computers, my phone and searched through our bedrooms. It was really humiliating. I was furious.
After the raid Greg and I were subjected to immense scrutiny from the ATO and the AFP. The detection by the ATO and being able to link me getting advice from Greg was better than I thought it would be. Based on the evidence and the full investigation by the ATO it was found that the arrangements Greg had put in place were illegal and because of the seriousness of this, we were being prosecuted.
The ATO told me I was responsible since I’d actively avoided paying the tax by entering into the arrangement, and verifying my return.
In court I was found guilty and upon sentencing, the judge pointed out that the tax I had deliberately evaded paying was enough to fund an entire floor of a children’s hospital, and that the community doesn’t tolerate this behaviour. The media loved the story given the recent deal with my software had made the headlines.
I know that I’m on the ATO’s radar now and my software sales have taken a dive since people found out what I did. I had to sell the house to pay the tax and penalties and move towns to get away from the embarrassment. Not to mention the legal fees. Greg is facing serious professional consequences too.
I still don’t want to pay a cent more than I have to, however this experience has had consequences for me and my family financially and socially. It would have been cheaper to pay the amount of tax I was supposed to pay rather than trying to avoid it. Also, some of my industry colleagues have seen what happened to me, and I hear they are checking how they are set up to make sure that what happened to me doesn’t happen to them.
What the ATO does
- Our advanced data and analytics identify Greg’s attempts to take advantage of the tax system and allow us to link Trent to Greg.
- We have the right staff with the right capabilities to gain valuable insights into taxpayer behaviour, recognise patterns and gather evidence, eg e-auditors, forensic accountants, etc.
- We work with other law enforcement agencies to deal with those who abuse the system.
- We work across government to understand Trent and Greg’s entire situation, which allows the AFP and other law enforcement agencies to act on our behalf.
- We support staff with interdepartmental mobility and secondment opportunities.
- We treat clients based on their behaviour and choices. As Trent and Greg abused the system we used the full force of the law. We recognise that this increases community confidence.
How the ATO behaves
- We collaborate across the ATO and government to understand our clients' circumstances and offer a fair and differentiated service.
- We use our collective talent to achieve the right outcomes.
- We are supported to take ownership, exercise judgment and make timely decisions.
- We are pragmatic and fair in our decision.