Tax

Topic 1

Criminal liability for tax avoidance — secondary parties

• 3 relevant Acts:

  • Crimes (Taxation Offences) Act 1980 (Cth) — specific offence for defeating an existing/known tax liability

  • Crimes Act 1914 (Cth) — general federal criminal procedure (historically the source of aiding/abetting & conspiracy)

  • Criminal Code Act 1995 (Cth) — now contains the general extended liability provisions (s.11.2 aiding/abetting, s.11.5 conspiracy) that apply across all Cth offences, tax included

• Key section: s.6(1)(a) Crimes (Taxation Offences) Act 1980 — offence to directly/indirectly aid, abet, counsel or procure another person (incl. a company) to enter an arrangement to avoid paying income tax.

• Context/origin — "bottom of the harbour" schemes:

  • Company has known/accrued tax liability → assets & profits stripped out → empty shell sold on → tax debt uncollectable

  • 1980 Act = direct legislative response, targeting people who engineer the stripping, not just the insolvent company

• Critical point: liability applies even where the arrangement was done on professional advice. "I was just advising the client" is not a defence if the adviser knew the purpose/effect was to defeat a tax liability.

• Distinction to remember: this offence targets defeating recovery of an undisputed, correctly assessed liability — different from evasion offences (TAA 1953 s.8C/8K/8N; Criminal Code Div 134/135 obtaining financial advantage by deception), which target misrepresentation to the Commissioner.

• Professional relevance: links to CA ANZ Code — integrity, not being associated with misleading info/schemes.