What is the legal definition of Tax Evasion?A person must not, by a deliberate act or omission, evade or attempt to evade tax.
Examples of Tax Evasion
- You are required to report your earnings to the government and pay tax. You are offered a cash-in-hand job and decide not to report your earnings, and not to pay income tax.
LegislationThe legislation for this offence can be found on section 61 of Taxation Administration Act 1997 (‘the Act’).
Elements of the offenceTo prove this charge, the Police must prove the following beyond reasonable doubt:
- That the accused evaded or attempted to evade paying tax…
‘Tax evasion’ is not defined in the Act, so the court would apply the ordinary meaning of ‘evade’. To evade paying tax means to avoid or dodge paying tax.1 Whether or not the accused avoided or dodged paying tax in accordance with the Act will be a matter of fact.
- By a deliberate act or omission.
In order to be liable under this section, the accused needs to evade tax by deliberate act or omission. Mere inadvertence or carelessness would not be sufficient – there needs to be deliberateness on behalf of the accused.
“Did you deliberately avoid paying your tax?”
Questions in cases like this
- Did you avoid paying your tax?
- Was this avoidance deliberate?
The maximum penalty for Tax Evasion (s61 of the Taxation Administration Act 1997) is a fine of 1,000 penalty units in the case of a body corporate. In any other case, the court may impose a maximum of 200 penalty units or imprisonment for 2 years, or both.
Other important resources
- Tax Planning, Avoidance and Evasion in Australia 1970-2010: The Regulatory Responses and Taxpayer Compliance
- Victorian Sentencing Manual: Taxation offences