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  • How we detect and deal with those who don't do the right thing

    We use various sources and compliance activities to detect and deal with people or organisations not meeting their tax and super obligations.

    We also receive information about tax avoidance from the community. If you know of someone doing the wrong thing, you can report your concern and we will investigate.

    Next step:

    Follow the links below for specific information for:

    Methods we use to detect those doing the wrong thing include:

    • data matching information given to us by third parties about money received from wages, shares, sale of property and government payments against the information included in tax returns
    • a program of verification checks, both before and after refund payments are made, to identify incorrect and fraudulent refunds
    • clarifying our view to address emerging economies, particularly in relation to online services and the sharing economy and tax
    • using robust analytical models to compare income and deduction claims to individuals or businesses in similar circumstances. We may ask for clarification when income and claim patterns are outside our expectations.

    For small businesses our activities also include:

    • investigating when employees tell us they may not have received their full super guarantee entitlements, as well as using our own data to identify employers who are likely to not be meeting their super guarantee obligations
    • using the small business benchmarks along with other risk indicators to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income
    • investigating concerns reported by people who think there could be inappropriate or unfair business practices occurring.

    Actions we take to deal with those who do the wrong thing include:

    • imposing penalties and charging interest responsibilities aren't fully met. Honest mistakes we will take this into account, but deliberately avoiding tax will result in much firmer action (including prosecution). If you do find that you have made an error you should tell us as soon as you can – see how to correct a mistake
    • taking firmer action, including using the full force of the law, for those abusing the tax and super systems. See tax crime prosecution results for examples.

    See also:

    Individuals

    For individual taxpayer our activities also include:

    • writing to ask to review reported income and deductions
    • reviewing or auditing where it seems income may not have been reported, or deductions have been incorrectly claimed.

    Small businesses

    For small businesses, our activities also include:

    • identifying businesses without electronic payment facilities as they are at more risk of making a mistake and not declaring some, or all, of their income
    • investigating when employees notify us they may not have received their full super guarantee entitlements from their employer, as well as using our own data to identify employers who are likely to not be meeting their super guarantee obligations (see our compliance approach for more detail.)

    Privately owned and wealthy groups

    For privately owned and wealthy groups our activities also include:

    • applying a risk-differentiation framework to determine the level of our interactions, based upon our understanding of risk positions, circumstances, choices and behaviours.
    • making contact if we identify a potential issue with tax affairs to resolve or better understand the matter. If the matter is not resolved and requires further examination we will generally conduct a review or audit.
    • deeper investigations on particular matters of potential concern. For example, we have established a Trusts Taskforce to investigate aggressive tax avoidance and evasion using trusts.

    Publicly listed businesses

    For publicly listed businesses our activities also include:

    • applying a risk-differentiation framework to determine the level of our interactions based on our understanding of risk positions, circumstances, choices and behaviours.

    Not-for-profit organisations

    For not-for-profit organisations our activities also include:

    • dealing with areas of concern including where the organisation has incorrectly accessed tax concessions, such as providing help to get things right or, where appropriate, cancelling entitlements to access tax concessions.

    Super funds

    For super funds our activities also include:

    • Reviewing contraventions reported as a result of annual independent audits of SMSFs by approved SMSF auditors and risks identified from our data holdings. We use a risk differentiated approach to deal with non-compliance of SMSFs based on the overall risk posed by a fund.
    • Monitoring the compliance of approved SMSF auditors and, if we identify a failure to adequately and properly perform duties, referring them to the Australian Securities & Investments Commission (ASIC) for investigation.
    • Identifying and pursuing intermediaries who seek to exploit vulnerabilities in the system, including detecting fraud and/or illegal early release of super.

    Large super funds generally try to do the right thing, but we may identify a significant issue. In this situation, we may:

    • provide a diagnostic report and work with administrators and funds to interpret the results
    • encourage self-correction using voluntary disclosures.

    Tax professionals

    For tax professionals our activities also include:

    • ongoing practitioner compliance programs focused on
      • practice management, including lodging clients’ returns by lodgement program due dates
      • return preparation processes, including omission of income and refund fraud
      • information security
      • promotion of tax avoidance schemes
    • identifying and dealing with unregistered tax and super professionals
    • where appropriate, we will undertake audit action, civil litigation, impose interest and penalties, and prosecution.
    Last modified: 22 Nov 2017QC 44380