Michael Hardy reminded me of retired Gary and his first Monday of freedom “Yoga can bring focus to the mind by helping people get back in touch with their breath. In the past 25 years, yoga has been widely accepted as a health regime and a lot of people start yoga because it is accessible, gentle and simple. It is beneficial in many ways – from improving posture to encouraging deeper sleep, awareness of the breath and helps people connect with others and their communities.”
Some Lucky Souls are now diving into yoga no more intel assessments …
Concrete consequences for GST crooks
Astonishing outcomes in GST fraud cases - a problem for all of us.
The views in this article are the personal views of the author only.
The ATO issued a press release earlier this week on the outcome of three GST fraud cases linked to Operation Protego. I was surprised by two things in relation to this press release. Firstly, despite the significance of the fraud in each of the three cases (fraud ranging from $168,000 to $1.1 million), two of the three cases resulted in the person convicted being released on immediate recognisance. The second surprising aspect was that this was deemed worthy of a press release by the ATO.
Whilst it is good to hear that the action is being taken to combat tax fraud, in my personal view the ATO promoting the outcome of these particular cases does nothing to deter fraud, in fact, in my view it encourages it. Yes, in each of the cases custodial sentences were imposed, but in reality, what is most significant is that in two of the three cases, the convicted person was released on recognisance.
One The unfortunate message from these cases could be seen to be that if you commit significant tax fraud and get caught, you can actually escape without serving a custodial sentence. I make these observations without knowing anything about the actual cases beyond what is in the press release, and I am not questioning the correctness of the decision of the judge in these cases. I do not doubt there may have been relevant circumstances that justified the immediate release of those sentenced beyond what is in the press release.
In looking into this a bit further, I was somewhat surprised to find the following observation by the Judicial Commission of New South Wales:
‘A review of the case law on social security fraud (see R v Boughen[2012] NSWCCA 17 at [60]–[65]) suggests that statements of principle on fraud are applied less rigorously in tax cases so that tax offenders are treated more leniently than social security offenders: R v Boughen at [66], [91]. It has been observed that the frequency of Crown appeals in tax cases (including DPP (Cth) v Goldberg[2001] VSCA 107, DPP (Cth) v Gregory[2011] VSCA 145 and R v Jones; R v Hili [2010] NSWCCA 108) reflects that “sentencing judges find it difficult to impose sentences that reach the high level which they have, in theory, accepted as being appropriate”: R v Boughen at [69].’
Why would tax fraud justify less rigorous penalties than social security fraud? Tax fraud is harder to identify and prosecute and the amounts at stake are significantly higher.
And then even more astonished to read:
‘Courts have observed that Commonwealth tax fraud has not always been sufficiently reflected in the sentence imposed, compared to other forms of criminality: R v Nguyen[1997] 1 VR 386 at 389–390; DPP (Cth) v Gregory[2011] VSCA 145 at [54]–[55]. The consequences of discovery and punishment and the havoc a custodial sentence usually wreaks on the lives of white-collar criminals and their families, may distract attention from the importance of general deterrence: DPP (Vic) v Bulfin[1998] 4 VR 114 at 131–132.’
Due to the sheer complexity of tax law, tax fraud it is often very hard and expensive to prosecute, which is itself a barrier to deterrence. Prosecution of tax crimes also compete with other significant demands on the CDPP, such as the prosecution of drug and terrorism related offences, which understandably get higher priority.
As such, it becomes even more important that sentences in the few tax cases which are brought send a strong message of deterrence.
It is also astonishing to see in the sentencing guidelines, under tax, observations that other consequences for white-collar criminals can distract attention from the importance of general deterrence. Whilst I appreciate a custodial sentence may wreak havoc on the lives of white-collar criminals, such sentences no doubt have a similar if not greater impact on those committing other types of fraud, or other examples of white-collar fraud, such as social security fraud. In my view deterrence is of greater priority in white-collar cases, particularly in tax cases.
If tax fraud is to be addressed, particularly in the context of the type of arrangements covered by Operation Protego, deterrence is critical. There are limits to the vigilance of the ATO and the ATO are constantly having to balance between providing convenience to the majority of the community who do the right thing and protecting the system from those seeking to defraud it.
Protections that avoid fraud in the system generally come at a significant cost and inconvenience to those trying to do the right thing through higher rates of verification / audit, challenge by the ATO and tighter access to systems and registration.
Interested in other people's views.
Associate Solicitor at Madgwicks Lawyers (Taxation Disputes and Insolvency Litigation)
3dA very good perspective Jeremy. I would think that when Al Capone is reincarnated he should consider a career in Australia
Director - EY Private - Tax (Perth) | Registered Tax Agent | Lawyer | CA | CPA | Tax Institute Tax Trailblazer Award Winner
3dI agree with you Jeremy. You just need to look at the recent ART decision in Evan v CoT for an example of how those who commit these types of crimes have no appreciation for their seriousness. A quick scroll through Tik Tok may also highlight how little regard is given to tax crimes by some members of the public. A financial penalty (such as the multi million dollar penalty in Evans) won’t necessarily act as a deterrent if realistically it will never be able to be paid.
Director, O'Rourke Consulting; Adjunct Professor, School of Accounting, Auditing and Taxation, UNSW Business School
3dA very interesting post Jeremy and, yes, astonishing! I agree with you. There can be no basis in principle for sentencing in tax fraud, including GST fraud, to be more lenient than for other money related crimes. And the deterrence, especially for the Tik Tok influenced fraud in Operation Protego, should be a strong factor in sentencing.
IMF Expert Advisor - Washington DC | Senior Executive | Board Member | Speaker
3dVery insightful Jeremy, particularly the references you provided that sentencing for tax fraud may be frequently less than for other types of fraud, and may not fairly