Possible tax evasion by Child Support customers (individuals and business) 277-09100000

Tax evasion is defined as 'unlawfully escaping liability for, or payment of, tax. It is when someone has deliberately and dishonestly evaded tax.'

Possible tax evasion which would be appropriate to refer to the Australian Taxation Office (ATO):

• Examples of where a person or business may be evading tax, go to Step 2
• Indicators that a person or business may be evading tax, go to Step 3

Note: Service Officers are not expected to have a detailed knowledge or understanding of ATO legislation. However it is important that the Service Officer collects as much information as possible to provide the ATO with a quality referral.

Information forwarded to the ATO for investigation may result in monitoring of the taxpayer's compliance, requesting further information from third parties or seeking information directly from the taxpayer through phone calls, letters or visits. Information is also collated to help identify tax evasion trends, high risk industries and other issues that should be monitored.

Some examples of where a person or business may be evading tax include:

• not declaring all assessable income
• not declaring cash wages income
• claiming deductions for expenses that were not incurred or are not legally deductible
• claiming input credits for goods on which GST has not been paid
• employers not forwarding tax withheld from employee's wages to the ATO
• employers not withholding tax from an employee's pay
• employers not paying employee superannuation entitlements

Signs that a person or business may be evading tax include:

• not being registered for GST despite clearly exceeding the threshold
• not charging GST at the correct rate
• not wanting to issue a receipt for goods or services
• providing false invoices
• using a false business name, address, Australian Business Number (ABN), or Tax File Number (TFN)
• keeping two sets of accounts
• not providing employees with payment summaries

Sources of information about possible tax evasion include the following:

• Contact from:
  • a party to a child support case about the other party, go to Step 5
  • a third party with information about a person they believe is a child support parent, go to Step 6
• Any coincidental investigation of a customer's financial circumstances, for example Capacity to Pay (CTP), Change of assessment (CoA) or Objections, go to Step 7

Note: there is no requirement to refer customers or third parties to the ATO to report tax evasion. Customers can independently decide to contact the ATO. Customers can visit the ATO website for more information.

Ask the person to explain how the other party is evading tax.

Discuss with the customer if the income information about the other party affects their assessment and if a referral to Change of Assessment (CoA) is appropriate.

Is a tax evasion referral appropriate?

• Yes, go to Step 8
• No, procedure ends here

Ask the third party to explain how the person is evading tax.

Do not confirm with the third party that the person they are reporting is or is not a child support parent because privacy, secrecy and confidentiality provisions apply.

Is a tax evasion referral appropriate?

• Yes, go to Step 8
• No, procedure ends here

When conducting financial investigations, if there are signs that a person or business may be evading tax, determine whether the information is appropriate for referral to the ATO for investigation. If a tax evasion referral is appropriate, go to Step 8.

Advise the informant that for secrecy and privacy reasons the results of any investigation or actions taken by the ATO will not be disclosed to them.

Note: the informant does not have to provide their name or personal details for a tax evasion referral. These details are not collected in the tax evasion referral macro or recorded in Cuba.

Ensure as much personal and/or business information is collected about the subject of the referral as possible to support an ATO investigation:

• full name, address, tax file number (TFN), work address, employer, phone numbers, date of birth, tax agent
• business name, Australian Business Number (ABN), director/s name/s and addresses
• detail of the tax evasion, for example
  • cash in hand payments
  • any assets that indicate they have a higher income than that declared
  • when a business pays cash wages and to whom
  • types of financial transactions that are not being recorded
  • if an individual or a business offers discounts for cash payments
  • approximate length of time the tax evasion has been occurring

Open the Tax evasion referral macro to:

• collect details of possible tax evasion to be referred to the ATO
• create a Cuba document
• create an email to the ATO

Paste the document created from the macro into the Communication window for the customer being referred to the ATO:

• Type: Written Com Out
• Case No: blank
• Reason: Provide Information
• With: External Agency
• Category: Other
• Issue: Other

If the informant is a party to a child support case, document the discussion in their Communication window. See Documenting Child Support information.

If the informant is a third party, their personal information is not recorded in any Communication window.

A CTP referral may be appropriate where the income being used in the assessment may be considered inaccurate. See Capacity to pay (CTP) Child Support and Step 1 in Agreements received during the COA process table

Select the create email tab in the macro. This will automatically populate the information captured in the macro into an email to the ATO.

Send the email using the classification DLM SENSITIVE.