Taxpayers who attempt to use illegal tax schemes to avoid paying existing tax debts could find themselves hit with hefty penalties or even jail, the tax office has warned.
The Australian Taxation Office has reportedly already identified two operators touting the arrangements, under which the taxpayer pays the operator part of the debt in return for paperwork purporting to allow them to claim the full amount as a tax deduction.
Tax Commissioner Michael D’Ascenzo says the tax office is keeping a close eye on these arrangements and the taxpayers who take advantage of them.
“There may be serious implications for taxpayers who enter into these arrangements.” D’Ascenzo says. “We will also be considering whether the outstanding debt or the amounts actually repaid by the taxpayer are deductible, and whether the general anti-avoidance rules may apply. In addition, we will be considering the application of the promoter penalty laws to those involved with promotion activities.”
If the deduction schemes are found to be illegal, the taxpayer could be hit with a financial penaltiy equal to up to 75% of the amount underpaid or even criminal sanctions.
More details on the schemes that are under scrutiny can be found on the tax office website.