It is a criminal offence to evade or attempt to evade paying tax. You may be charged with Tax Evasion if you deliberately evade or attempt to evade paying tax. ‘Evade’ means to escape or avoid. This can be by deliberately doing something or by deliberately not doing something. For example, if you claim illegitimate or fake expenses or underreport your income, you could be charged with Tax Evasion. Similarly, if you engage in work on a cash-in-hand basis and do not report earnings as income tax, you could also be charged with Tax Evasion.
It is important to remember that tax minimisation or planning is very different from Tax Evasion. Legitimately reducing the amount of tax you pay is not a criminal offence. Tax minimisation is claiming legitimate deductions that you are entitled to which reduce your income. Contrastingly, Tax Evasion is falsifying deductions or claiming deductions you are not entitled to.
Elements of the offence
In order to establish the offence of Tax Evasion, the Prosecution are required to prove the following elements beyond a reasonable doubt:
- You avoided, or attempted to avoid, paying tax; and
- That your act or omission was deliberate.
You can also be found guilty of Tax Evasion if you were an officer of a company or business and in your capacity, you deliberately avoided or attempted to avoid the company paying tax. For example, if you falsified company income records or illegally claimed duplicate expenses on behalf of the company.
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If you have been charged with Tax Evasion, you may have several defences available to you, such as:
Lack of intent – that you did not deliberately avoid or attempt to avoid paying tax. For example, you were careless in completing your income tax return or recorded an incorrect amount inadvertently.
Factual dispute, such as if the taxation records were incorrect, or if you dispute any of the facts presented in the Prosecution’s case.
You were acting in your capacity as an officer of a company or business. This defence may be available if you discharged your duty with due care and diligence to prevent the commission of the offence of Tax Evasion. This may be where you the case where you did not have knowledge of the corporate conduct, or could not have reasonably known.
However, it is important to consult an experienced legal practitioner as soon as practicable if you have been charged with Tax Evasion to ensure that you receive comprehensive advice and discuss all options available to you based on your specific circumstances.
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Leanne Warren is an accredited criminal law expert specialising in tax evasion offences.