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  • Tax crime prosecution case studies

    From failing to lodge tax returns to submitting false work-related expenses,we will not tolerate any form of tax crime.

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    March 2021 – Criminal conviction for tax agent's false returns

    A New South Wales tax practitioner has been convicted and sentenced to an 18-month Community Corrections Order for SMSF auditor number (SAN) misuse.

    Over five years, Mr Konstantino Koufos lodged 30 self-managed super fund (SMSF) annual returns on behalf of 13 clients.

    He falsely claimed they had been audited by an approved SMSF auditor and entered details of an auditor who was completely unaware his details had been used.

    It was only when the auditor received a letter from one of Mr Koufos’s clients that he knew something was wrong. To his surprise, they were seeking information about audit reports that were said to have been prepared in his name. The auditor contacted the Institute of Chartered Accountants Australia and New Zealand to inform them his SAN had been used without his knowledge.

    When we launched an investigation, it became clear Mr Koufos had engaged the auditor’s services in 2014, but no further contact had been made since then. Mr Koufos deliberately provided false information in the returns, including approved audit completion dates for each fund.

    As part of the ATO’s response to the black economy, we support tax professionals and the integrity of the profession by taking appropriate action against those doing the wrong thing.

    As the outcome of this case shows, deliberate and sustained behaviour may result in a criminal conviction.

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    March 2021 – Cop couple caught and convicted

    A New South Wales couple who were employed as police officers found themselves on the other side of the law after making multiple false work-related expense claims.

    In their 2017 and 2018 income tax returns, husband and wife Paul MacDonald and Kathryn Goddard claimed a range of deductions they hadn’t legitimately incurred. As a result, they received refunds totalling $28,483 and $17,851 respectively.

    Our systems immediately detected the claims were unusually high, but Mr MacDonald and Ms Goddard ignored system-generated warnings and proceeded with their returns.

    When we commenced an audit, the pair provided a number of false documents in an attempt to substantiate their claims. For example, they provided a letter claiming to be from a Senior Sergeant at their work. Upon further inspection, the person’s name had been spelled incorrectly, their title and phone number were wrong, and the local area command referenced on the document no longer existed.

    The pair also provided fabricated invoices for work-related travel. Ms Goddard falsely claimed to have spent $464 per night at a Port Macquarie motel and Mr MacDonald falsely claimed to have spent $578 per night at a Tea Gardens resort. In reality, the ‘weapons training’ they claimed to have attended in these locations didn’t exist.

    Mr MacDonald and Ms Goddard have since repaid the amounts they obtained.

    When their case was heard at East Maitland Local Court, they were both convicted and sentenced to a two-year good behaviour bond in the sum of $2,000. They also ‘copped’ a $3,000 fine.

    Receiving a criminal conviction is serious. It can significantly impact your employment, reputation and ability to travel overseas. Don’t take the risk.

    March 2021 – Daycare administrator sentenced for WRE fraud

    A 32-year-old Canberra man has been handed a criminal conviction and fined $1,800 for claiming false work-related expenses.

    Between September 2013 and April 2014, Mr Luke Kerding was employed as a daycare administrator. For the next nine months, he was subcontracted by another centre.

    Throughout the course of his employment, he was provided with all the necessary equipment, including computers and stationery, and was reimbursed for all travel expenses.

    Nonetheless, he claimed work-related car, travel, clothing and self-education expenses he wasn’t entitled to.

    When Mr Kerding was asked to substantiate the claims, he said he got to decide what he could claim and it was the ATO's job to ‘just process the return’. His claims were subsequently disallowed.

    A month later, he tried to cheat the system again in his 2015 and 2016 income tax returns. This time, he provided a letter to validate his claims, but checks with his employer confirmed it was false.

    In total, he wrongly obtained $6,814 in refunds.

    This case serves an important reminder that no matter how much it is, over-claiming will be detected. If it’s deliberate, serious penalties may apply.

    January 2021 – Fraudulent claims land businessman in hot water

    A business owner who tried to obtain more than $50,000 in fraudulent GST refunds has been sentenced to two years jail. He will be released after serving two months on a $500 recognisance release order to be of good behaviour for the remainder of his sentence.

    Mr Kevin Harker – who was an accountant – lodged 22 business activity statements (BAS) on behalf of entities he and his wife controlled.

    None of the entities were carrying on an enterprise. Mr Harker fabricated the figures on the activity statements to obtain GST refunds totalling $43,834. He also tried to obtain an additional $8,798, which we stopped pending further investigation.

    During an audit, Mr Harker said the entities were involved in producing native bush foods for health food bars, but no tangible product was ever developed or put on the market.

    Accounting files also showed transactions to support the GST claims were bulk entered after Mr Harker found out about the audit. There was no evidence in the bank statements to suggest the reported expenses had been paid.

    People who rort the GST system make it unfair on other businesses who operate within the rules. As Mr Harker found out, we won’t tolerate this behaviour.

    December 2020 – Fake tax agent arrested returning to Australia 14 years later

    A fake tax agent who tried to get his hands on more than $60,000 in fraudulent tax refunds has been sentenced to five months in jail.

    Over a period of four months, Mr Ibrahim El-Hassan lodged five false income tax returns on behalf of unsuspecting individuals. Without their knowledge, he inflated their expense claims to generate a higher refund. He would then pass the original refund on to the individual but keep the difference.

    We launched an investigation in 2006 after a bank employee noticed an account had received two ATO refunds of more than $10,000 on the same day in different names.

    Less than a week after our officers executed a search warrant at his property, Mr El-Hassan fled the country.

    In August 2020, nearly 14 years later, he returned to Australia, unaware Australian Federal Police officers were waiting for him at the airport. The arrest warrant and passenger alert system had remained open the whole time he was gone.

    Mr El-Hassan was immediately arrested and brought before the courts.

    It’s not the first time we’ve been patient and it certainly won’t be the last. Recently, a 19-year tax fraud probe also ended in jail time. We’re committed, we’re thorough and we’re experts at tracking down tax evaders.

    November 2020 – Fraudster tracked down and held to account

    After two years on the run, a West Australian man has been sentenced to two years and six months jail for attempting to obtain nearly $1 million in fraudulent tax refunds.

    Mr Reece Potter submitted five original and three amended tax returns for the 2012 to 2016 financial years. He falsely claimed he had been working for a meat company that had withheld significant amounts of tax from him.

    As a result of his claims, Mr Potter received four refunds totalling $42,191. Our investigation stopped the remaining refunds, amounting to $1,002,745.

    Mr Potter was due to be sentenced in 2018, but failed to appear in court.

    Two years later, police found him in in Mandurah and he was brought before the courts. He will now spend two years and six months behind bars.

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    Last modified: 08 Apr 2021QC 58778