The Most Common Illegal Business Tax Avoidance Strategies
8 November 2017
The top 8 illegal business tax saving strategies are:
- Illegal cash economy – The ATO estimates about 1.6 million businesses (mostly micro and small businesses with an annual turnover up to $15 million) operating across 233 industries are part of the illegal cash economy. Tax Justice Network spokesman, Mark Zirnsak, said the ATO’s data was just the ‘tip of the iceberg of shady employers who cheat their employees of the wages they are owed and cheat the community of the taxes that should be paid’.
- Setting up bogus businesses, registering for GST, collecting the GST credits on false purchases, then disappearing.
- Using stolen TFNs, ABNs and bank accounts to deposit income (which is never declared to the ATO).
- Inflating business expenses by creating false receipts or claiming non-deductible expenses (like private holidays or private mortgage expenses).
- Claiming bogus business deductions for payments made to overseas entities they control for supposedly marketing or management services.
- Profit shifting – Where the prices paid between related parties for goods, services or use of assets are inflated above their true economic value so that profits are artificially moved between different jurisdictions.
- Treaty shopping – Where transactions are organised through intermediaries located in particular jurisdictions in order to obtain different treaty benefits without those intermediaries materially contributing to the transaction;
- Global tax evasion can also occur through the use of secrecy jurisdictions to hide or wash money or other assets.
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2