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Tax Fraud: W hen is Tax Avoidance a Crim inal Offence? By Craig - - PowerPoint PPT Presentation
Tax Fraud: W hen is Tax Avoidance a Crim inal Offence? By Craig - - PowerPoint PPT Presentation
Tax Fraud: W hen is Tax Avoidance a Crim inal Offence? By Craig Elliffe 2 July 2 0 1 0 Tax Avoidance and Crim inal Acts The difference between tax avoidance and tax evasion is the thickness of a prison wall. Denis Healey, former
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Observations
Unfamiliar Area of law Recent Changes Cases
- Tax Advisors
- Tax Payers
- Crown/ SFO
- Hayes (2008)
- Changes to
statutes
- Misdirected
Focus on investors
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Tax Avoidance and Crim inal Acts
- Com pany director jailed for tax evasion
Thursday, 01 July 2010 13: 55
- Evading tax of more than $700,000 has led to four years jail for
a Bay of Plenty labour hire company director.
- Harbhajan Singh Kahlon had been found guilty on 23 charges of
GST-related tax fraud and later admitted a further 46 charges of tax evasion involving PAYE. He was sentenced last Friday in the Tauranga District Court.
- Inland Revenue Assurance manager investigations Jonathan
Matthews says this sentence makes it crystal clear to others considering tax fraud and evasion, that they'd better think again.
- "We will catch them and there will be very serious
consequences," he says.
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Clever Schem es and Crim inality
Criminal Offences
Section 143B Tax Administration Act “Knowingly providing false, incomplete or misleading information” Intending to evade the assessment of tax Obtaining a refund in the knowledge of no lawful entitlement
Section 228 Crimes Act “intent to obtain any... pecuniary advantage.. Dishonestly and without claim of right uses any document
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Section 2 2 8 Crim es Act 1 9 6 1
Use of a document (tax return)
- To obtain a pecuniary advantage
With the intention to obtain property
- Through the dishonest use of the document
That the accused had no claim of right
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Dishonestly, w ithout claim of right
Hayes v R (Supreme Court 2008) “belief” assessed without reference to reasonableness (Robin Hood) or honesty
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Reasonableness
If belief was qualified by the word “honestly”- two problems
- Reasonableness: Genuine belief in
lawfulness even if unreasonable is not caught by section 228
Overcomes the problem of someone framing their own moral code
- Will impact on the evidentiary
credibility
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Application of section 2 2 8
Tax return used To obtain a refund (pecuniary advantage) Did not believe entitled to a refund
Assessment of the facts to see if the taxpayer genuinely believed they were entitled to the claim (reasonable doubt that they had a mistaken belief)
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Features of tax avoidance
Non- commerciality Concealment Artificiality Difference between legal and economic effects
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Australian decision R v Pearce
Investors $10000 Servcom
$39000 (deducted)
MAGICA/ Allied Securities
$29000 Loan (NR)
Advisors and accountants
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Com m on Features of tax avoidance and crim inal offences
Artifice Lack of Commercial Rationale
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Com m on Features of tax avoidance and crim inal offences
Role of the Advisor Fees and Remuneration
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