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Tax Evasion:

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Tax evasion is a serious and at times criminal offence that should not be overlooked. The distinction between tax avoidance and tax evasion is often misunderstood by taxpayers. Generally speaking, in making a distinction between the two it is possible to say that avoidance involves arrangements within the law that take the taxpayer outside the scope of particular tax legislation, while evasion involves arrangements outside the law where liability to tax, having been incurred, is wilfully concealed or ignored. To exercise solid business acumen and prudence it is advisable to seek professional and sound legal advice from a Taxation Lawyer to ensure that your financial arrangements do not constitute tax evasion.

It is important to consider your financial and taxation management and strategies to carefully make the distinction between tax minimisation and tax evasion. The latter is a serious criminal offence, in particular because the Crimes (Taxation Offences) Act 1980, makes it an offence to participate in, or aid or abet participation in, arrangements that render a taxpayer unable, or likely to be unable, to pay income tax for which it is or will be liable. Taxpayers and their advisers must realise that tax evasion may result in imprisonment. Indeed, it seems that the courts in all states are now more willing to imprison people for serious breaches of the tax laws. It is wise to seek skilled legal and financial advice from an experienced Superannuation and Taxation Lawyer to ensure that you comply with your taxation disclosure and payment obligations as the penalties may be harsh and of a criminal nature.

In addition, it is important to ensure that any taxation structures and strategies are not actually considered to be ‘tax avoidance’ arrangements or a ‘sham’ to avoid tax. The tax planner must pay constant regard to the general anti-avoidance provisions of taxation law because if they are relevant to a particular transaction then the transaction is a sham, and it will be inherently ineffective and subsequently the Commissioner can strike it down and impose penalties accordingly. In considering any tax planning arrangement, the tax planner should consider the ATO’s likely approach or attitude to the arrangement. In particular, the tax planner should be aware of any pronouncements by the government or the ATO, and any relevant public rulings. The ATO also issues “taxpayer alerts” as early warnings to taxpayers that certain tax planning activities are under risk assessment by the ATO. Taxpayers should exercise caution in relation to arrangements described in a taxpayer alert and should consider obtaining a private ruling or comprehensive legal advice from a skilled Taxation Lawyer before entering such an arrangement.

If you need further legal advice on your tax appeal matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au.

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