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Level 11, 456 Lonsdale Street, Melbourne,
Victoria 3000
45 Gheringhap Street, Geelong,
Victoria 3220
62 Kepler Street, Warrnambool,
Victoria 3280
Jun 3, 2024

Tax Evasion and The Benefits of Hiring a Corporate Crime Lawyer

Man Standing Alone

Whether you run a mid-sized business or a transnational corporation, tax compliance is a serious issue that can have major ramifications and ripple effects for management, employees, and the livelihood of an entire organisation. 

If charges are laid or tax activity is flagged by the ATO or SRO, a corporate crime lawyer plays a pivotal role for the organisation or individuals accused of wrongdoing. For MNCs, these circumstances often involve millions of dollars and scrutiny over various business practices. Throughout this article, we will detail the different legal issues associated with corporate tax and outline how and when to seek legal advice.

As a preeminent corporate law firm in Melbourne, we represent clients for a range of white collar crime charges, including the failure to comply with Australian taxation laws.

Tax Avoidance vs Tax Evasion

Tax avoidance and tax evasion have vastly different definitions, implications, and consequences. Although the boundaries between the two can become blurred in more complex situations, one critical difference is that most instances of tax avoidance do not result in criminal penalties, while tax evasion may lead to significant fines and/or imprisonment.

Tax Avoidance

Tax avoidance refers to legitimate methods used by taxpayers to reduce taxes within the confines of the current regulations. Also known as ‘tax minimisation’, this approach gives taxpayers the opportunity to make legal deductions that allow them to avoid paying substantial amounts of tax in that financial year. Actions that fall under the scope of tax avoidance generally result in no criminal penalties.

Here, the individual or organisation will typically use existing loopholes in the current Australian tax laws, or shelter income via other means. As these methods are taking advantage of the existing boundaries of taxation law, there is a low chance that activity will be identified, flagged, or investigated by the authorities. However, it is very important to note that the line between tax avoidance and evasion is not black and white. 

In Australia, common tax avoidance actions can include:

  • > Tax Deductions
  • > Salary Sacrifice
  • > Capital Gains Tax Planning
  • > Maximising Superannuation Contributions
  • > Investing, Income Splitting, and Structuring

Multinational Tax Avoidance

Multinational tax avoidance is currently a hotly debated topic in Australia, and calls have been made from various politicians and organisations to reform the existing legislation, as well as enhance transparency around multinational tax.

Significant laws relevant to multinational tax avoidance in Australia include:

  • > The Multinational Anti-Avoidance Law (MAAL): Introduced in 2016, the MAAL legislation applies to MNCs that enter schemes with a purpose to avoid paying corporate tax in Australia.
  • > Diverted Profits Tax: In effect since July 2017, the DTP imposes a 40% tax on MNCs that employ methods and strategies to divert profits made in Australia. 
  • > Transfer Pricing: Built off OECD principles and guidelines, transfer pricing governs dealings that occur between related entities to ensure that they are in line with the ‘arm’s length principle’. 
  • > Thin Capitalisation: A thinly capitalised entity occurs when operations are funded by debts in a disproportionate manner, thereby seeking to deny MNCs the ability to use excessive deductions for debt financing costs.

Tax Evasion

Tax evasion, as detailed by the ATO, involves “the taxpayer making a false statement to the ATO about their tax or being recklessly careless about whether what they state is true or false.” (Source: Financial crime: Australian Taxation Office) Also referred to as ‘tax fraud’, tax evasion is the allegation that an organisation or individual has illegally reduced or eliminated their tax liability. 

Whether classified as ‘fraud’ or ‘evasion’, any charge that meets this criteria is a serious accusation. As a serious allegation, this falls outside of many regular dealings with the ATO. Once a prosecution is underway, you cannot resolve the matter simply by paying back the amount that is owed.

In this situation, tax evasion is a criminal offence and therefore, you will require the services of a corporate crime lawyer. The prosecuting authority will not only be seeking justice for the alleged breach of tax regulations, but also wanting to set an example that deters other companies from repeating the same practice.

Common examples of tax evasion in Australia include:

  • > Income Discrepancies and Underreporting
  • > Inflating or Falsifying Deductions
  • > Using Offshore Tax Havens

The stakes are always high if you’re accused of a white-collar crime, and you’ll need a leading criminal law team on your side. Facing criminal charges brings with it several challenges, but Gallant Law is here for you every step of the way, offering advice, support, and strategic legal defence. 

If you need to speak with a corporate crime lawyer in Melbourne, Geelong or Warrnambool, please contact your nearest Gallant Law office now.

Defence Against Tax Evasion and Fraud Charges

Accusations of tax evasion, non-compliance and fraud are certainly a daunting prospect. However, it is also important to remember that there are seasoned corporate lawyers available to fight for your best interests. This may include everything from helping you to understand the extent of the charges, outlining your options, and developing a resolute defence.

While the specifics of each case are unique and nuanced, there are some defence strategies that a corporate crime lawyer may employ. These include:

Honest and Reasonable Mistake

Bookkeeping is a complicated process and the law does recognise this in certain circumstances. If tax evasion is the result of an inadvertent mistake or oversight rather than criminal intent, you may be able to avoid a conviction or receive a less severe penalty.

Disproving Criminal Intent

When charges of corporate tax fraud and evasion are made, the onus is on the prosecution to prove that there was criminal intent to misrepresent financial information and records. Here, legal terms such as ‘fraud’ and ‘deception’ have clear definitions, and can be challenged by the defence lawyer.

Factual Disputes

In the context of tax evasion and fraud charges, the defence may be able to dispute certain facts pertaining to the case, including whether the taxation records are incorrect.

Partnering with a Corporate Crime Lawyer

A failure to comply with Australian taxation laws brings serious consequences for your organisation, as well as the personal reputation of directors, shareholders, employees, and other parties associated with the business. This is why it is vital to partner with an experienced corporate crime lawyer in the event of any tax related matters.

At Gallant Law, our legal team specialises in various areas of corporate law, including:

  • > Directors withholding information
  • > Director breach of duties amounting to criminal offending
  • > Failure to comply with taxation Laws
  • > Failure to lodge documents
  • > False accounting
  • > False or misleading records, information or statements
  • > Falsification of documents
  • > Destroying records
  • > Fraud
  • > Inclusion of False or Misleading Information in Records
  • > Records for Tax Department

Work with a Leading Corporate Crime Lawyer in Victoria

As you can see, issues of corporate tax evasion and reporting can have wide ranging effects. This is why we always recommend reaching out for support as soon as any legal issues arise.

Whether you need assistance from a corporate crime lawyer in Geelong, Warrnambool, Melbourne or any other area of Victoria, Gallant Law is ready to represent you. No matter how complex the case may be, our legal team can provide a sound defence while supporting you with compassion and care.

Disclaimer: Legal Information and Advice

The information provided on this blog is for general informational purposes only and should not be construed as legal advice. The content is not intended to create, and receipt of it does not constitute, a solicitor-client relationship. Readers should not act upon this information without seeking professional legal counsel.

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