Sunday, 5 July 2009

The 10 golden rules about tax fraud and the Family Court

The 10 golden rules about tax and Centrelink fraud and the Family Court:

  1. Although you cannot be compelled to give evidence that may tend to incriminate yourself (However there is an exception in the Commonwealth Evidence Act that says you can be forced to answer questions, with some limited immunity.), your documents can be used against you.
  2. If you value property or income differently in one document as compared to another (for example, understating income for tax purposes, but overstating it for a loan application), you should expect that the court will take the most adverse view of you. In the right context, this means that your high income [as set out in the loan application] would be expected, along with the low expenses [as set out in your tax return] which could mean less directly for you on property settlement [as you have a higher earning capacity, and possibly an ability to pay spousal maintenance] plus a higher tax debt.
  3. If you think your fraudulent documents with Centrelink and the Australian Tax Office will remain hidden, simply because you don't have any copies, think again. If you don't voluntarily disclose them, the court can force you to get them under Freedom of Information legislation from Centrelink and the ATO.
  4. The court can and will refer people for tax fraud to the proper authorities (and for that matter, if there has been social security fraud, a referral to Centrelink).
  5. In considering property settlement and spousal maintenance, the court can take into account a contingent liability to the ATO ( or for that matter, Centrelink). This might reduce the asset pool. Unless there is specific evidence from an expert, such as a forensic accountant, the figures for a contingent liability might be very rubbery. This might mean that the numbers for the contingent liability would be very small- which means you get referred off, have to pay the penalties, back taxes and interest, but get very little credit for it in the property settlement. [ You know you are going to be buried by the Commissioner so that in the Family Court you might want to make the amount of that contingent liability as big as possible, but discover that the amount allowed by the Family Court is much smaller than you could have imagined.]
  6. As a general rule, those who engage in tax evasion also do not engage properly in disclosure in the court proceedings. Disclosure will be enforced by the court if necessary. If you don't properly disclose your documents and financial affairs, there can be all kinds of consequences. Disclosure has been described as a case of "show and tell" not "hide and seek".
  7. Just because you haven't engaged in evasion, but your spouse has, do not assume that you are immune. Aside from any potential criminal penalties, the amount available might be greatly diminished after the Commissioner has become involved.
  8. Once you have been referred to the Commissioner, good luck! You should expect that the Commissioner will come after you with the full weight of the law.
  9. Former spouses often have mighty fine memories of what they say you have not disclosed to the Commissioner. Whether those memories are accurate is another matter entirely.
  10. If your spouse threatens to report you if he or she doesn't get what they want on the property settlement- get legal advice - FAST! They may have committed the crimes of extortion, attempting to pervert the course of justice, threatening a witness, or compounding a crime. Giving in to a blackmailer might be a very foolish step, and in any case can't prevent them reporting you anyway.

3 comments:

trisha said...

thanks for the very useful post

Anonymous said...

Centrelink fraud, usually taking SPP when the new boyfriend moves in or working for cash, is massive in Australia. Only s few unlucky punters are paraded as an example by Centrelink

ways to reduce tax said...

However, there is actually a structured policy published by the ATO on the way that it collects debts and the government is bound to abide by the terms of this policy in the collection of its debts. Although it is a very lengthy document, there are some basic principles which guide the collection of debts in the ATO.