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  • Tax crime prosecution case studies

    From failing to lodge income tax returns to submitting dodgy work-related expenses, we will not tolerate any form of tax crime. The following case studies reinforce that those who deliberately cheat the system will be held to account.

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    BAS agent busted

    A former Queensland BAS agent has been sentenced to three years jail after using her clients’ identities to obtain fraudulent refunds.

    Over a period of two years, Ms Alana Hodge lodged 47 false business activity statements (BAS) on behalf of seven unsuspecting clients.

    In each case, she would change the bank account details and contact details on their ATO client account, before lodging false statements in their name.

    Often, she would wait until the company had ceased operating to commit the fraud, but in some instances, it took place during the course of her employment.

    In total, Ms Hodge obtained $192,140 in fraudulent GST refunds. She also attempted to obtain an additional $65,056, but these refunds were stopped by our officers.

    When the matter was referred to the Commonwealth Director of Public Prosecutions (CDPP) for prosecution, Ms Hodge was charged with 47 counts and sentenced to three years jail. She was also ordered to pay reparations.

    As the outcome of this case highlights, we are committed to protecting the community from the small number of tax professionals who abuse their position of trust. Small businesses like the ones Ms Hodge targeted have enough to think about without having to endure the emotional and financial stress of an unethical BAS agent.

    If you are concerned about the conduct of a tax practitioner you can report them to the Tax Practitioners Board at https://www.tpb.gov.au/make-complaintExternal Link.

    Egregious intermediaries

    Tax agent con caught and convicted

    NSW man Nigel Bradshaw (also known as Bruce Bradshaw) has been sentenced to 12 months jail for ripping off his clients and the community through an income tax fraud.

    Between 2010 and 2015, Mr Bradshaw lodged a number of income tax returns and amended income tax returns containing false information. He fraudulently under-reported income in order to gain inflated refunds, substituting his postal and bank account details for his clients'. Refunds were funnelled through a bank account Mr Bradshaw controlled before being passed on to his unwitting clients, with Mr Bradshaw pocketing the inflated difference.

    On other occasions, Mr Bradshaw lodged correct income tax returns on behalf of his clients, but still siphoned off some refunds into his own accounts.

    His activities resulted in a loss to the Commonwealth of $84,063 and a loss to eight individual taxpayers of $12,069.

    His theft was uncovered when his former employer, a property investment services company in Sydney, cleaned out some old filing cabinets and found a number of notices of assessment (NOAs) that had been fraudulently altered.

    As well as his criminal conviction, Mr Bradshaw was issued with full reparation orders.

    We share an interest with professional associations in ensuring the integrity of the tax profession. The Tax Practitioners Board terminated Mr Bradshaw’s registration in 2015.

    Failure to lodge

    Company director sentenced for ongoing non-compliance

    A company director has been convicted and fined $51,500 after pleading guilty to seven charges relating to outstanding activity statements and failing to comply with information notices.

    Mr Michael George Fotios, the Director of private resource company Delta Resource Management Pty Ltd, was convicted and fined $37,500 for failing to lodge five activity statements from 1 January 2016 to 31 March 2017.

    He was also convicted of failing to provide information and documents to us as required by notice. He was fined $7,000 on each of the two charges relating to this failure.

    Mr Fotios was fined a total of $51,500 across all seven charges in the Perth Magistrates Court after the magistrate considered his:

    • plea
    • financial circumstances
    • lodgment of the relevant returns
    • compliance with the information gathering notice.

    The magistrate said due to the history of non-compliance and the seriousness of the offences, imprisonment was seriously considered as a sentencing option, however, the appropriate penalty was applied. He described Mr Fotios’ non-lodgment and non-compliance as contemptuous.

    If you are aware of fraudulent behaviour you can report a concern confidentially or phone us on 1800 060 062.

    False work-related expense claims

    Ignored warning leads to work-related expenses conviction

    In addition to a $2,000 fine, a Victorian woman who made false work-related expense claims now has a permanent criminal conviction recorded against her.

    Ms Dana Spasojevic lodged her 2016 income tax return through ATO online services, claiming car, travel and other work-related expenses totalling $26,206. The unusually high claims – which would have given Ms Spasojevic a $9,165 tax refund – triggered a warning message asking her to check again, but she went ahead with her claims anyway.

    When our data matching capabilities identified that these amounts were unusually high, Ms Spasojevic’s return was selected for audit. Once the audit commenced, Ms Spasojevic nearly halved her expense claims, suggesting the errors were due to a faulty calculator.

    At the conclusion of the audit, Ms Spasojevic received an administrative penalty of $2,867 for making false and misleading statements. She was also charged over the matter.

    This wasn’t the first time Ms Spasojevic had attempted to obtain a financial advantage. She had been audited previously in 2012 and 2014, with her work-related expense claims being reduced on both occasions.

    We always do everything we can to help people comply, but as this case highlights, those who deliberately set out to cheat the system will be held to account.

    Incorrect deductions land chef in hot water

    A Queensland woman has been convicted of three criminal offences after making false and misleading statements on her tax returns.

    Ms Helen Feulufai was employed as a chef at a hospital, where she was supplied with a full work uniform, personal protective equipment and tools by her employer. She was also not required to travel or use her own vehicle in the course of her employment. Despite this, Ms Feulufai claimed travel and clothing expenses as work-related deductions on her 2016 to 2018 financial year tax returns.

    She also claimed charitable donations to an organisation that was not registered as a deductible gift recipient, in order to obtain refunds to which she was not entitled.

    The refunds amounted to more than $45,000 over three years.

    Ms Feulufai had been audited previously for claiming similar deductions, and in both cases was sent a letter providing education about valid deductable expenses for travel, vehicle and charitable donations.

    In addition to repaying the refunds, in June 2019 Ms Feulufai was ordered to pay a fine of $3,000, as well as an additional $20,000 payment to the Commissioner of Taxation and court costs.

    GST fraud

    Fishy business lands seafood farmer behind bars

    A 49-year-old man who netted himself nearly $600,000 in fraudulent GST refunds has been sentenced at the Brisbane District Court to three years and six months jail.

    Over a period of three years, Mr Brian Russell purchased a number of businesses and purported to develop them into profitable enterprises. But despite claiming a significant amount of input tax credits, plus the available research and development (R&D) grants, he didn’t progress with any of the businesses.

    Further investigation revealed that across the three entities – two of which involved seafood farming – Mr Russell made false claims totalling more than $8 million.

    In some instances, he had attempted to cover his tracks by seeking ‘pro-forma invoices’ for equipment he never intended to purchase. But our criminal investigation officers didn’t take the bait.

    Mr Russell was convicted on 40 counts and will now spend time behind bars.

    NSW man jailed for tax fraud after impersonating his brother

    A tax fraudster, who appeared before the New South Wales District Court via audio visual link (AVL), has been sentenced to three years and eight months jail.

    Mr Mark Hughes created a fake business and registered it in his brother’s name. He then lodged eight false business activity statements (BAS), fraudulently obtaining $17,353 in GST refunds and $9,256 in fuel tax credits. He also attempted to obtain a further $49,360 in fraudulent GST refunds, but these were stopped before payment occurred.

    We first became aware of the scheme in September 2013 when we received a paper BAS, allegedly from Mr Hughes’s brother. It falsely represented that he was entitled to GST refunds of $49,360. The claims were selected for audit and the refunds were not issued.

    Throughout the audit process, Mr Hughes pretended to be his brother. As a result, Mr Hughes’s brother was unaware that a business had been registered in his name until we spoke with him during the course of our investigation.

    Further investigation revealed that Mr Hughes had also submitted seven false activity statements on behalf of the company. He claimed the company had made sales and received fuel tax credits, but an analysis of the company’s finances suggested otherwise.

    Mr Hughes, who carried out the fraudulent scheme while he was on parole for similar offences, has been ordered to pay the money back along with serving jail time.

    Illegal early release of super

    Strong sentence for illegal early release of super scheme

    On 22 October 2019, Mr Kent Quang Nguyen was sentenced to three years jail for orchestrating an illegal early release of superannuation (super) scheme.

    As the owner of Komplete Finance Solutions, Mr Nguyen operated a self-managed super fund (SMSF) known as Tot Form Super Fund.

    Between 2007 and 2009, Mr Nguyen used this fund to arrange the unlawful early release of super for a number of people in the community.

    In each case, the individual’s existing super balance (held within a retail super fund) was rolled over to Tot Form Super Fund, with the total amount of funds unlawfully withdrawn exceeding $700,000.

    Mr Nguyen retained a significant portion of this amount.

    For example, in one instance, funds totalling $60,000 were rolled over, but the individual only received $35,000. Mr Nguyen reportedly advised his clients that he had taken a small fee and that the rest of the money had been paid to the ATO as tax.

    Mr Nguyen was charged with 25 counts of obtaining money by deception.

    Super is money set aside to provide for your retirement. Taking your super out from any super fund early without meeting a condition of release, or encouraging others to do so, is illegal. As this case shows, severe penalties can apply to promoters who encourage illegal early access to super.

    Refund fraud

    Five-year sentence for tax fraudster

    A man who used stolen identities to get his hands on fraudulent tax refunds and social security payments has been sentenced to five years in jail.

    In 2016, Queensland man Joseph Kanowski took over an unsuspecting individual’s myGov account, navigated to ATO online services, and changed the payment destination details to his own. He then submitted two false income tax returns, netting himself $8,027 in fraudulent refunds.

    A few months later, Mr Kanowski used the personal information of another individual to set up a myGov account in their name. This time, he wrongfully obtained $5,260 by submitting an original and amended income tax return for the previous financial year.

    But it wasn’t his only crime – Mr Kanowski made a number of false Centrelink claims, which resulted in him wrongfully obtaining social security payments. He also impersonated other Centrelink customers and organised for their payments to be redirected to his account.

    Mr Kanowski was charged with four counts of obtaining a financial advantage by deception and has been ordered to pay the money back.

    This scheme came to our attention following an investigation by Services Australia and a referral from the Commonwealth Director of Public Prosecutions (CDPP).

    While we are resolute in our efforts to prevent and detect tax crime, this case serves as an important reminder to keep your personal information safe.

    As an added level of security, you should use multi-factor authentication where possible. Using SMS codes as your sign-in option for myGov is a quick and secure way to sign in to access ATO online services.

    If you believe your tax file number (TFN) or other personal identifying information has been stolen, disclosed or used by an unauthorised person, phone our Client Identity Support Centre on 1800 467 033.

    Tax fraudster who stole the identity of 52 people jailed

    A Queensland man who tried to steal more than half a million dollars' worth of tax refunds from unsuspecting job applicants was recently sentenced to five years jail.

    Mr Micah Robby Elstak used the aliases Robert Ketting-Oliver and Ryan McCarthy to orchestrate an elaborate online job scam, which involved conducting fake interviews over the phone. After emailing applicants to confirm they had been successful, Mr Elstak requested a scanned copy of their driver’s licence, bank account details and tax file number (TFN).

    Mr Elstak used this information to create myGov accounts or to take over applicants' existing myGov accounts.

    After linking the myGov accounts to ATO online services, Mr Elstak lodged tax returns in their names. These refunds were credited to one of the 63 bank accounts he controlled.

    Along with our cross-agency partners at Queensland Police, we quickly identified the scheme, with $378,099 of the $565,895 Mr Elstak attempted to claim stopped before it reached his bank accounts.

    This serves as an important reminder to beware of what personal information you share. Your employer will only need you to provide details like your TFN and bank account details in a TFN declaration once you start work.

    You should also use SMS codes as your sign-in option for myGov, as this is a quick and secure way to sign in to access ATO online services.

    If you or someone you know has paid or provided personal identifying information to a scammer, phone us on 1800 008 540 to report it straight away.

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    Last modified: 29 Jul 2020QC 58778