Tax crimes are many and varied. There is a diverse and wide-ranging spectrum of tax crimes in Australia, all of which attract different penalties. And, while most business owners are aware of their obligation to pay tax, navigating the system itself can be challenging. Tax obligations extend further than simply remitting a proportion of business income to the Australian Taxation Office. Each obligation is imposed by distinct provisions within a range of statutes that collectively govern taxation in Australia. The confusion surrounding Australia’s taxation system is, to say the least, understandable. However, it is not insurmountable. With some background knowledge, it is possible to learn more about taxation laws in Australia.
There are several statutes that govern taxation laws and tax crimes in Australia
Before progressing into the finer points of Australian taxation law, it is important to recognise its sources. It is at this point that the complexity of taxation law becomes apparent. Notably, that is due to the two Taxation Administration Acts. One of those was enacted in 1953, while the other was enacted in 1997. Both remain active and binding in Australia, with each presenting its own series of taxation obligations. Although the two Acts are not in conflict, they must be considered in tandem, which lends a further layer of complexity to Australian taxation law. The two taxation acts create the Australian system of taxation; however, they do not administer it alone. For example, one of Australia’s most prolific taxes – the goods and services tax (GST) – is established by the A New Tax System (Goods and Services Tax) Act 1999. Then, to fortify the criminality of tax avoidance and tax fraud, certain criminal provisions in such acts as the Commonwealth Criminal Code intervene to prohibit certain conduct.
Businesses that fail to comply with tax laws in Australia face serious penalties
A common theme among Australia’s various tax-related statutes is the obligation to pay tax. Imposed on every citizen of Australia – and some non-citizens – in one way or another, that obligation is the bedrock of Australia’s economy. As if to underline its significance, Australian taxation law imposes serious penalties upon those who do not meet their taxation obligations. The penalties for such offences as tax avoidance and taxation fraud depend on the specific nature and extent of the offending. Penalties can be as minimal as the repayment of outstanding tax debts, or as severe as a term of imprisonment.
Consistent and effective record keeping is one way to avoid tax crimes
It is not reasonable to expect those without a legal or financial background to have an extensive knowledge of taxation law. Indeed, that area of law remains a niche even in legal and financial professions. However, there are pragmatic steps that businesses can take to minimise their tax liabilities, while discharging their obligations under the relevant taxation laws. Of most importance in that regard is consistent and effective record keeping. All documents related to income, expenditure, and taxation are important. With those documents, businesses can ensure that they are taxed fairly, or make compelling arguments to the Commissioner if they are not.
Avoiding tax crimes in Australia: financial literacy is vitally important
Financial literacy is not universally taught in Australia; however, it is of profound important in relation to tax. Essentially, financial literacy is the capacity to read, interpret, and manage financial documents effectively. Understanding different sources of income, how that income is documented, and how it should be taxed is the key to fulfilling taxation obligations, without sustaining unfair financial losses.
Tax law is arguably the most complex area of law in Australia: professional advice is important
It is not surprising that taxation law is one of Australia’s most complex areas of law. But that hardly places businesses and individuals at an advantage. That’s why professional assistance is important with regard to tax. Ensuring that tax is paid on the correct terms is the only way to avoid tax crimes in Australia. Doing so is easiest with the assistance of an accountant, and a lawyer with commercial experience.
By Finian McGrath
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