• Organised crime

    Organised crime is a national security threat that costs Australia around $36 billion each year.Footnote1 It can involve a range of criminal activities, for example illicit drug activity, organised fraud, money laundering and crimes against the person such as human trafficking.

    These costs affect all Australian governments as well as the economy, businesses and the broader community. Attempts to undermine the tax system can result in less money for essential services like hospitals, schools and roads.

    Tackling organised crime

    Australia has an Organised Crime Strategic Framework which outlines how government agencies will work together to fight organised crime. The ATO is one of those agencies with a shared responsibility under the framework to address the impact of serious and organised crime on Australia. The agencies use their specialised capabilities and expertise together to meet the challenges.

    Our primary role under the framework is to tackle the financial aspects of serious organised crime. We do this by:

    • targeting known business models used to facilitate tax crime such as
      • complex financial structures to conceal wealth
      • infiltration of legitimate industries by organised criminals
      • phoenix activity
      • refund fraud
      • abuse of off-shore secrecy havens
      • concealment of income off-shore
      • intermediaries promoting the use and abuse of off-shore structures
       
    • using our sophisticated analytical capabilities to analyse our extensive data holdings to identify any unexplained wealth which we use to undertake audits, raise assessments and apply penalties where appropriate. These data holdings include, property and other asset sales and purchases, ASIC information, motor vehicle data, share transactions, bank interest, dividend and AUSTRAC data
    • working with state, Commonwealth and international law enforcement partners to share intelligence and coordinate strategies targeted at serious criminal behaviour
    • applying differentiated taxation approaches to the serious and organised crime (SOC) population focused on ensuring the correct amount of tax is paid on all income including profits derived from illegal activity.

    Our differentiated approaches include:

    1. coordinated targeting of organised crime in conjunction with other state and Commonwealth law enforcement agencies
    2. demanding outstanding income tax return and business activity statements actively
    3. pursue civil debt recovery action against outstanding debt of key individuals, their business entities and family associates
    4. undertaking audit activity specifically targeting unexplained wealth but including other taxation obligations such as Superannuation and PAYG
    5. pursuing criminal investigations against those involved in tax crime
    6. asset restraint and forfeiture utilising proceeds of crime actions through the joint agency Criminal Asset Confiscation Taskforce
    7. other methods of securing collection such as the issue of Departure Prohibition Notices to restrict movements
    8. Case studies from Organised Crime in Australia 2015 – on the Australian Criminal Intelligence Commission (ACIC) websiteExternal Link.

    Case study: Fraudulent phoenix activity

    An earthmoving, garden supplies and property development business based in Perth created fake payment summaries, moved employees between related companies, and failed to remit monies withheld from employees’ wages to the ATO. The business owner then deregistered the (non-compliant) companies to reduce the risk of detection by authorities.

    The principal company director was sentenced to five years and three months jail for defrauding the Australian Government of $A6.7 million in unremitted taxes. He was also bankrupted after an investigation into his personal tax affairs. A number of other people associated with this fraud have also been prosecuted and jailed, including a former tax agent.

    See also:

    End of example

     

    Case study: Abusive use of trust activities

    The abusive use of trusts was employed to avoid in excess of A$50 million in tax in the property development sector over a period of 10 years. It involved the siphoning off of profits from the main entities to trusts and companies controlled by the principal and their siblings, with these profits then remitted offshore.

    In some cases, completed properties were transferred below market value to related trusts, before being re-valued to market and fully mortgaged, with the finance raised purportedly committed to a sham offshore property development syndicate. This had the effect of understating assessable profits, creating insolvency and recovery difficulties, and transferring wealth offshore without tax being paid. The case also involved related straw directors (including offshore nominee directors), and raised doubts about the independence of appointed liquidators.

    End of example
    Footnote 1
    Australian Crime Commission, The Costs of Serious and Organised crime in Australia 2013–14 (page 4) acic.gov.au/publications/External Link

     

    Return to footnote 1 referrer

    Last modified: 25 Jul 2017QC 33618