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  • Dealing with those who cheat the system

    Most people try to do the right thing. However, there are some who intentionally abuse the tax and superannuation systems or act dishonestly for financial gain. This deprives Australians of revenue that could be invested in essential services. In a global economy, we need to be vigilant about emerging risks arising from new technology.

    While we focus our efforts on preventing non-compliance, it is also our role to protect the integrity of the tax system and ensure everyone pays the right amount.

    We take firm action against people who intentionally falsify information on their tax returns, including penalties or prosecutions in serious cases. In conjunction with partner agencies, we target people who profit from criminal activity and work to protect taxpayers from fraudulent activities.

    We use analytical models to assess tax forms, and share data and intelligence with our global partner agencies to detect and prevent fraud. In 2016–17, we stopped over 26,500 tax returns and denied $89.6 million in attempted fraudulent refund claims.

    We have a three-pronged approach to tax crime:

    • Analysis of intelligence to identify risk and appropriate treatment.
    • Partnerships to prevent, detect and deal with tax crime.
    • Encouraging confidential reporting of suspected tax evasion and tax crime.

    Targeting tax evaders

    In cooperation with our partner agencies, we use various information sources and sophisticated analytics, to identify people who deliberately break the law to either:

    • avoid paying the right amount of tax
    • claim refunds or other payments they are not entitled to.

    In 2017–18, almost 1,900 individuals and companies were prosecuted for failing to lodge, failing to respond to notices, or making false or misleading statements.

    We also investigated 182 people for defrauding the Commonwealth. Following these investigations, 23 people were prosecuted and 21 sentenced, ranging from three months to eight years imprisonment.

    We also work with our international partners to combat tax evasion on a global scale.

    Following raids on a Swiss bank’s branches in Britain, France, Germany and the Netherlands last year, 346 Australian account holders were identified in a leak of details of 50,000 accounts. In May 2018 we began contacting 106 Australian private clients of the bank to discuss more than $900 million in suspicious transactions linked to secret numbered accounts.

    In July 2018, Australia, Canada, the Netherlands, the United Kingdom and the United States established a joint operational alliance – the Joint Chiefs of Global Tax Enforcement (J5) - to increase the fight against international and transnational tax crime and money laundering.

    It’s not a matter of 'if' but 'when' we will uncover tax crimes. Find out how we target tax crime:

    Black economy initiatives

    The black economy refers to people who operate entirely outside the tax and regulatory system or who are known to the authorities but do not correctly report their tax obligations.

    The government will inject $318.5 millionExternal Link over four years to implement new strategies to combat the Black Economy.

    Disrupting illicit tobacco activity

    We focus on disrupting the illicit tobacco trade that benefits organised crime syndicates and takes government revenue from the community.

    As of September 2018 we have:

    • prosecuted eight tobacco related fraud matters
    • undertaken 30 operations
    • seized and destroyed over 231 tonnes of tobacco with an estimated excise duty value of $194 million.

    In August 2018, the Illicit Tobacco Taskforce (ITTF) seized and destroyed 1.5 tonnes of illicit tobacco with a potential excise value of approximately $1.4 million from a property near Grafton in New South Wales.

    In July 2018, the (ITTF) uncovered 17 acres of illicit tobacco crops and six tonnes of tobacco leaf with an estimated excise value of $13.3 million.

    The Illicit Tobacco TaskforceExternal Link aims to protect future revenue and remove a key source of funding for organised crime.

    Find out more:

    Tax Avoidance Taskforce

    The Tax Avoidance Taskforce continues to achieve results in engagement, assurance and revenue in the markets of:

    • multinationals
    • large companies
    • high wealth individuals and their associated private company groups.

    Find out more:

    Phoenix Taskforce

    Illegal phoenix activity is the deliberate and cyclical liquidation of a company to avoid paying taxes, creditors and employee entitlements. This impacts the whole community, leaving a chain of suppliers, subcontractors and customers without what’s owed to them.

    The Phoenix Taskforce currently includes 32 federal, state and territory agencies to gather intelligence and targets those businesses and individuals who seek to cheat the system, as well as those who facilitate their behaviour.

    The taskforce raised over $199 million in liabilities and collected over $168 million in cash in 2017–18. The ATO had three successful prosecutions from ATO-related matters, resulting in criminal convictions and custodial sentences ranging from three to three and a half years.

    Serious Financial Crime Taskforce

    We are a lead agency in the fight against serious financial and organised crime. The Serious Financial Crime Taskforce is multi-agency and focuses on international tax evasion, fraudulent phoenix activity, and criminal behaviour related to superannuation and trusts.

    Since the taskforce started on 1 July 2015, it has achieved seven convictions, undertaken 824 audits, raised liabilities of more than $600 million, and collected more than $250 million in cash.

    In the last financial year the taskforce raised over $207 million in liabilities and collected over $79 million in cash. One criminal matter was successfully prosecuted, resulting in a custodial sentence of 10 years and three months.

    The increased capability of the taskforce enables it to respond to new and emerging risks, including transnational crime impacting on the Australian tax and superannuation systems.

    Black Economy Taskforce

    We know there is a strong sense of community outrage at the unfair disadvantage created by the black economy. The Black Economy Taskforce Final Report found ‘honest businesses are being penalised by the black economy’ and it allows some to play by their own rules and penalises businesses, employees and consumers who do the right thing.

    The government response to the final report included the announcement of a number of initiatives designed to deliver stronger enforcement through new approaches to data sharing, analytics and on-the-ground resources.

    These initiatives will involve a standing partnership between Australian Government agencies, including the ATO, and the private sector.

    Read the report:

    Last modified: 26 Oct 2018QC 57208