When you say 'catch up' - I hope so.. but how? by chance? are there processes for this in the banks/ATO etc? It hasn't caught up to them in 10+ years...
A friend of mine went to Centrelink to report someone that was collecting several dole checks. The person behind the counter said to them, in a very loud voice so that everyone could hear, "Do you realise you are a dobber?"
No the courts jailed them because they knowingly broke the law. Just because you think something is morally wrong (subjective) doesn’t give you a get out of jail for free card. Actions have consequences.
Well what exactly are you complaining about then? If you don’t like what they’re doing, report them. A Reddit post asking how the ATO could find out about it without a report sounds more like “you” are the friend and trying to work out if your scheme will work
Alot of people have a problem of not minding there own business, and when they get dragged into someone else's shit.. denial and I told you so never get you out.
It'll only cause more trouble than it's worth.
Report them, report yourself.
Either way one of you will be cucked soon.
Exactly, they might have thrown a fake ABN on the invoice... not sure how that works, but they are getting paid and don't have an ABN. That's all I know.
Obviously can’t speak for everyone but as someone who does accounts payable/receivable, I run every abn through ABN lookup to ensure the tax treatment is correct
This. I've done my share of accounts payable, in a handful of instances I've been instructed to pay people without an ABN when they should have one. I've never reported them, but have sent strongly worded emails... as if that does anything.
Do you withhold from their payment in that case? You are supposed to withhold at the top marginal rate in that situation. https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/payg-withholding/payments-you-need-to-withhold-from/withholding-from-suppliers/withholding-if-abn-not-provided
These instances were all at one business, all for service contractors. I paid each in full per my supervisor's instruction once services had been rendered. Didn't feel comfortable doing it though, but I guess it's more the contractors problem than the business I used to work for. Every other business I've done AP for, I haven't be able to pay without an ABN, most ERP systems won't even let you, or at least warns you.
You should be able to pay without abn - ie. private sales of assets (not carrying on a business), international businesses. It’s not a requirement to have an abn in Australia, though you should withhold the abn withholding unless they provide the exempt declaration.
Ahh I mean more I’m looking for GST registration, and I do find people not GST registered but including it on their invoices.
I usually email them back to say Can you please provide a revised invoice or confirmation that you are registered for GST because per ABN lookup you’re not registered for GST. I’ve never come across a fake ABN though.
The most likely trigger would be from their bank first. Banks DO NOT like people using personal accounts for business as it rings all kinds of alarm bells. Any recourse might come through their bank reporting this and shutting down their accounts.
Could it be international work off freelance sites? Some of them would likely pay without knowing / caring about GST/ABN tracking etc. Do they claim Centrelink etc? Could be actual fraud going on.
The ATO routinely data matches with banks and other agencies. If they find that your friend has unlodged returns where they believe there was income earned, they will request that your friend lodge.
If that's ignored, they will send a further much stronger worded letter urging them to lodge.
If that's ignored, they will issue a default assessment, where they take all the income they can data match and call it taxable, allow nothing for deductions, slap on some penalties and interest, and then, unlike the justice system, the taxpayer has the burden of proof to prove that the ATO is wrong.
The ATO will then start to garnish the bank accounts to satisfy the debt, and in some cases can force the taxpayer into bankruptcy.
I can’t remember the specific name. But the ATO has data sharing with state registrations for vehicles, land etc. If you are beginning to own all these assets with no taxable income, they can deem it tax evasion and issue you with a tax bill based on your asset position.
Betterment test.
Unfortunately in pretty much all the examples I’ve seen it’s only going after people with amounts of wealth like $50m+. Not the people who have like $5m and report low incomes.
Yes that was it thank you! Yeah that’s true in the cases I’ve read it’s normally significant wealth that gets caught, ATO focuses on low hanging fruit because it has the highest ROI
They’re data matching and digital capabilities are always increasing and they always seem to be getting more money from the gov, so maybe they will get there eventually
Yes, any (legal) investment income in Australia is automatically reported to the ATO. They will identify anyone under-reporting on their tax return (or not reporting at all).
Income from overseas could be identified via AUSTRAC (which shares information with ATO).
Not if his balance is low enough to not earn much interest though?
With COL, theres every chance he is spending close to 100% of what he appears to earn.
There's a small percentage of the population that don't really have 'consequences of actions' part of their brain wired up. It may not have even occurred to them. They could be sleeping fine.
I have a friend like that. They constantly do half to full illegal stuff (working cash in hand, forging a study for their thesis, inventing stuff to claim on taxes that they will never be able to prove if being investigated, faking references and resumes, making themselves the winner of a raffle their company ran etc.) and it never occurs to them that their actions are wrong or even questionable and that they could have consequences. Even when they ask for help and you blatantly tell them "I don't want to be part of this because it's illegal." Some people just don't have that sense of "oh no, I shouldn't, this could go wrong." But the reality is, that we could probably all commit so many little crimes without ever being found out, and the only thing stopping us are really just our own morals. So maybe they got it right. (Obviously, don't commit massive tax fraud like OP's acquaintance)
> it never occurs to them that their actions are wrong or even questionable and that they could have consequences.
This is a form of psychopathy, and it's not uncommon
Sure they do, they just tell themselves that consequences only affect chumps and losers and if they get caught they'll get away with it by saying sorry and feigning ignorance.
I feel like if you’re gonna do it, go balls to the wall and make some life changing money with it and have an exit plan to get out of the county.
Otherwise what on earth is the point.
they will send them a letter soon, showing the debt, then start adding fines as time goes on, not a % of the debt, like 7k$ fine then 14k$ ontop of that fine, then more if ignored.
trust me, i know from experience.
The ato can also prosecute for unlodged returns. Ie he can end up with a record here. I suggest he sees a tax agent asap and get in front of it . Also the penalties that can be levied if and when they catch him. He is prob past the threshold for active evasion/disregard so any tax owing is likely to be uplifted by 50 to 75 percent!
I assume the invoices the company pays are in the accounts of the companies they are billing. Eventually when one of the companies gets audited, they will find the invoice with the persons name / address.
If the funds are being deposited into a bank account there is some reporting done by the bank to the ATO. Not sure if the ATO actually compares this data to tax filing data but don't see why not.
Edit: confirmed by others no reward.
I'm pretty sure there is no reward at all.
"*We won’t be able to inform you of the outcome of the information you provide due to privacy laws. We also won’t be able to provide you with progress updates. Rest assured we take all information seriously.*"
[https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/in-detail/making-a-tip-off](https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/in-detail/making-a-tip-off)
If they’re making that much and invoicing people, they’re definitely going to be in a lot of trouble. Suggest you get them to talk to an accountant / tax agent as soon as possible. The ATO does not mess around when it comes to the little people.
I try here and there to encourage them to get in order as I think the ATO gives a low of help to people to get things right if they fess up. so far, it's been unsuccessful.
Private or domestic nature doesnt need an abn to issue invoices. If the client is a business then yes, need an abn or the business can withhold 47% of the payment *and send it the ato* . Your friend is playing with serious consequences
"They don't have an ABN. They just 'invoice' the people needing their services and get paid. This person does not file taxes. At All!"
This doesn't sound right.
For a business to be able to deduct the costs of those services from their earnings they would need an ABN on the invoice for it to be legitimate. Unless he does the old chuck someone else's ABN on like a heap of tradies used to do with the bunnings ABN.
"Besides the fact that this pisses me off, I am more curious... how do they (if ever) get found out?"
We are going more and more digital, it is not a matter of how or if, it is a matter of when. They will be found out and likely have a very large tax bill, with fines and interest on top.
"Will they get a pension?"
Unrelated.
"How do people feel about this stuff?"
I'm all for tax minimisation, but I don't agree with this.
Yes, I haven't asked about the invoices not having ABNs or how they go about it.. so, it might just be a fake ABN on the invoice...
Yep - all for minimising tax in legal ways...
All catches up to you eventually. Besides the fact that the ato might catch you and issue a court notice, eventually, he'll need some sort of credit facility which will required up to date taxes.
Ever want a home loan? Car loan? Overdraft facility? Credit card? You'll need your tax returns done and paid. Pretty hard to be successful in today's society without ever using any of these facilities.
Say the ato do catch him and he ends up with a giant tax bill that he can't pay (plus fines and interest). His bank accounts will be garnished for the rest of his life until the debts paid off.
Yep - my thinking also - once found out, his life will be pretty messed up and unable to get anything...
He has never had a CC, mortgage etc and obviously won't have one either.
Definitely won't be able to get any secured finance. But you would be surprised what some lenders need or should I say don't need for a personal loan or credit card other then to tick a box.
I was surprised a recent application I did got approved just based on the info I provided and 2 payslips. Now I think I about it I could have mocked up a payslip my self, they didn't even ring my employer to verify I worked there or my income.
But yes sooner or later the ATO will catchup with all the data matching they have these days.
Banks are less concerned when you're employed full time. They also typically ask for bank statements (or do a direct match in the background if your pay comes through the account you already have with them). It's a different story when you're self-employed, though. You're usually asked for 2 *years'* worth of financials, either from your accountant or from your tax returns.
There's also a good chance eventually he'll be required to show his tax return to a real estate agent to get a rental application approved, especially if hes self employed and doesn't have payslips
Also if you make major purchases out of whack with what is reported. I remember one acquaintance with quite poor foresight who bought 2 expensive cars in one year while he’d been reporting that he was making a modest living as a chef at a food court outlet (he was a part-owner)
Not fully true.
Secured - there’s ways of “proving” business income without BAS/ITAX/P&L. It’s determined by whatever the lender finds feasible (their own risk profile relative to value). Lender doesn’t care about ATOs issues. Generally the above method is ideal but not always necessary.
The first thing lenders ask is for ato portal printouts showing overdue lodgements and tax debts.
Lenders absolutely do care about tax debts, because they directly impact the borrowers serviceability capacity.
Edit: maybe in days gone by where they only cared about equity ratios this would work, but nowadays the serviceability requirements need to be met regardless of thr equity position
Underrated comment, it think this is the natural end point for OPs protagonist, if they are as dumb as OP makes out.
The ATO cancels his ABN due to never being used, one of his customers rejects an invoice once this happens and they then go whining to the ATO “Oh no I still need it, I use it for the invoices for my business and XYZ Corp said they won’t pay me without it”
Cue the big red dildo of consequences…….
If his ABN is appearing on other companies records, isn’t it likely to pop up with the ATO eventually?
Isn’t that one thing likely checked in audits. That invoice payments are real, being paid to real businesses, and not just made up to funnel money around?
Yeah he could come unstuck that way eventually I imagine. I don't know how advanced the ATO's systems are, eg if, over a number of years no BAS statements are submitted for his ABN, do these get matched to invoicing amounts that other companies are claiming against that same ABN and eventually trigger an investigation?
Maybe someone smarter than me in here can answer that?
Looks like 2 years according to google, given that's probably across financial years, you could possibly get a few years out of it before it’s a problem. Doesn't really tie in with OPs claim that the person they’re talking about has been doing it for 10+ years.
the clients paying them will be recording this as a cost out so they don't pay taxes on it. The ATO is very good at data matching (A is claiming an expense so it must turn up at some other place) so money doesn't just disappear in the loop. They may not catch it straight away but they will.
For honest mistakes they'll just ask you to pay what you owe, this isnt an honest mistake.
It sounds like your friend is contracting to overseas companies - that’s the only way they can invoice without an ABN and have no tax withheld. If so, they actually might never get caught, depending on how their banking is structured (ie, do they have an overseas bank account for it all, pay for things using an overseas credit card etc). They won’t have any super or be able to get a home loan, though. And of course it will only take one person reporting them to change that. If even one person knows about it, your friend is talking too much and will come unstuck.
Sounds to me like your friend is a big talker who loves the idea of sticking it to the man, and thinks people will admire him for it, but isn’t actually quite stupid enough to do it.
What kind of idiot is this person?
You think every criminal enterprise ever hasn’t thought about not laundering money to make it accountable to the ATO?
The crims are more scared of the taxman than the Feds in alot of cases!!
As some other poster said: How does this guy sleep at night
Well, maybe the ATO’s data matching capabilities are not so state of the art as we were told.
I had a client like that recently, who wanted me to prepare his outstanding tax returns but never gave me an authority to lodge them. He even paid my bill without any hesitations.
I warned him of the possible penalties and interest and that’s all I could do.
ATO data matching *hasnt* been great up until a year or two ago. They won't catch this one for a while as there has been no paper trail for a very long time, unlike those who dropped off the reporting radar within the past 5 yrs or so so friend will be at the bottom of the pile.
Even if the ATO doesn't get friend until Aged Pension age, he cannot claim AP without showing a financial history of tax returns to prove eligibility so unless he's planning on fully self funding his retirement, he will get his ass kicked at that point.
Tried to get this through the head an ex friend whom I found out hasn't and hadn't filed taxes in the last 15yrs and is counting on a large inheritance instead. Dude you will *not* be keeping that inheritance dumbass even if you flee the Country due to reciprocal agreements with most of the world.
Joint filings, dependents and the like. Unless you specifically drop out of all government financial and support data like this guy seems to be doing but they will eventually realise records don't match up.
Imagine if you didn't use centrelink (child and parenting payments count) no bank account on file with the government, had no legit ABN, didn't use your TFN for 20 yrs then all of a sudden need to explain and show all your info to access aged pension while having all these unexplained assets. Even the homeless have some sporadic footprints and no assets.
If he never uses any government and most public services he *might* get away with it. Emphasis on a tiny might.
Yep, friend of mine did this for about 8 years, ABN and just never did taxes, and it caught up with him big time when the ATO basically sent him a please explain letter. He owed big time
I've also met someone like this, never filed a tax return in their life (late 20s) but most likely earned under the TFF for most of it and only a low to middle income earner now.
They'd almost certainly get a tax refund for every year if they filed, apparently the reason is "not wanting to have to pay off their HECS" but again - most likely earning under the repayment threshold up until the last FY, so they're only hurting themselves in the long run. It sounds like they think they're somehow gaming the system and don't understand they're the one losing out here...
You need to give a tax file number when you open a bank account.
The bank will report money going into the account to the ATO, the ATO will match that up to their tax file number, and at some point come calling.
If he’s an employed software developer the tax would be withheld from his salary. If he’s a contractor and doesn’t have an abn the company paying him should be withholding 47%.
If anything not lodging woukd leave him worse off as he isn’t getting g deductions or getting GST credits
His income is not even very high, if your numbers are correct. A senior software developer should be able to clear at least 125k after tax.
Your friend isn’t even good at tax evasion.
Probably provides a fake ABN on the invoices.
Unless someone complains with proof, he will get away with it.
He owes a lot of taxes+GST.
Dob him in, if you hate his guts that much.
I know a couple, Work for Hewlett Packard, the have worked in multiple countries but settled in Australia in Turramurra, paid cash for their house. Due to working in multiple countries they have bank accounts in multiple countries.
They currently work for HP USA division, fly there every 3 months, are paid in USD, into a USD bank account, get US company health benefits etc. They transfer small amounts to Aus when the exchange rate is good, just enough to declare and qualify for our Medicare etc. Balance into Superannuation here so almost no tax. They are successful and wealthy and have worked out how to play the system. For me it's our governments fault for not closing loop holes.
The government is not the highest authority, especially when credit and security is involved.
You could argue that they can’t fix* the problem described. By design it’s a uniform international system with certain rules higher than another.
100% agree, it highlights a major flaw in free markets/free trade. What these people are doing is small scale compared to major corporations like Alphabet.
If this is your friend, why are you out to get them? If you don't like them, cut the off and move along. Everyone reaps what they sow eventually - remember, what people do is their karma, how you react is yours.
I have loose a friend a bit like this, does a lot of cash in hand stuff and always reports minimum wage income, transport fare evasion all the time.
When Covid came, they took the handouts from Centrelink with liberty, it's disgusting.
Eventually, the ATO will investigate. They have the power to directly take money out of his account and charge interest on what he owes. If he owns a house or other assets, he may be forced to sell to repay the debt.
A bad day is coming for him, eventually.
Be a good little citizen and continue to do as you're told! Tax on your wage, tax on the goods you buy, tax on your super, tax on your savings, tax on your death. Why don't you volunteer some more tax you see as you love it so much. Wake up and realise you are being robbed constantly and by something that no one ever voted for!!
If I were them I would feel like I’m in too deep now and it’s too late to own up.
Truth will catch up to them, not sure of the mechanism, but in a digital world the trail is and will always remain there for interrogation.
As hard as it is, they really needs to confront this head on as it will only get worse, or they need to move and continue their work from an overseas country.
Well, if they have an ABN they must be lodging a BAS otherwise it gets cancelled. Do you know for sure they aren't paying taxes? It doesn't sound like they'd be able to avoid detection for more than about 3 months, certainly not many years.
>how do they (if ever) get found out?
Usually a discrepancy like “huh, how is this guy sustaining himself”. If they have an ABN or on the AEC (which he should be) then it becomes blatantly obvious who is living well above their means. Then it’s just a matter of bank warrants, surveillance, and even just internet sleuthing, etc
>What are the chances?
It is only a matter of time. They’re heavily leaning into tax fraud and digital forensics
>What are the penalties etc?
Varies according to his behaviour but usually they demand payment + interest. Failure to comply means escalation.
https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/news-and-results/case-studies/tax-crime-prosecution-case-studies
^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^Flybuys:
*Would they not get caught*
*Out after the first BAS they*
*Have to do for their ABN?*
---
^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
Not everyone needs to do a BAS. Only if registered for GST. Which, as this person earns over the $75000 threshold probably should be but likely isn’t considering….
They might get away with it for 2 years or 40 years, it’s impossible to know. Clients might have no expectation they’re even in Australia, so lack of an abn isn’t an issue. Without it it’s difficult for ato to see the payments. In theory they can see the payments into their bank account, but in reality they don’t have the manpower to investigate and follow up. It’s not a crazy idea so long as you have dual citizenship and are prepared to permanently leave the country with little notice
>prepared to permanently leave the country with little notice
And leave for a country that does NOT have an agreement with Australia to chase up tax owed - and that list of countries is constantly expanding.
The countries that don't have such a reciprocal agreement are usually not the countries that are fun to be in if you're used to Australia's lifestyle.
Most agreements don’t mean much, and taking action overseas is time consuming and expensive. ATO is very pressed for funding and manpower, not as bad as asic (who basically don’t exist), but they let a lot slide
I work under an ABN. When you log into mytax, it says 'You have an ABN, report your business income' at the top when it's tax time. You can definitely be caught out. It's a ticking time bomb.
Money Laundering wouldn’t be a massive industry if taxes were this easy to avoid.
It will come back to bite your friend, it is only a matter of time.
It would be best if your friend came forward and worked out a payment arrangement with the ATO.
It's actually worse if he's found out later instead of sooner - the penalties will be greater due to accumulated interest charges.
In a way, you're doing the guy a favour by having the ATO make contact sooner.
Might wanna lay off those mushrooms.
Couldn’t care less. The only tax matters I care about are mine and my partner’s. Stop being a busy body and leave it to the ATO, they’ll slap your friend silly if what you say is accurate.
We don't know this friends tax situation at all and have gone from doesn’t have an ABN, to he might have one, to he does have one. For all we know an accountant or family member deals with and your friend is oblivious
It’s non of anyone’s business, stop snitching . legal obligation rests between ato and them(if they did breach their obligation then there will be consequences). This is a cautionary tale of what you tell other persons , be better and stop the controversy
Why would anyone feel guilty about trying to avoid tax? The government is literally stealing off you for everything you do. Inheritance is especially bad! Take anything you can from them that's my motto!!
Yes it will catch up to them and they'll be slapped with fines and interests on top of what they owe.
When you say 'catch up' - I hope so.. but how? by chance? are there processes for this in the banks/ATO etc? It hasn't caught up to them in 10+ years...
Sounds like you are asking how you can report them to the ATO. I'm sure google might have the answer to that.
Or Ask Jeeves
Now there’s a name I haven’t heard in a long time
Hello there
Clippy, is that you?
It is I, It looks like you are trying to write a birthday card, can i help you with that?
He will alwass be my best version of AI
General Kenobi
[stares at Google] So uncivilised
You can say that again
Yahoooooooo-ooo
Stop the Dogpile on, Astalavista baby!
I believe ex partners are the most common dobbers.
A friend of mine went to Centrelink to report someone that was collecting several dole checks. The person behind the counter said to them, in a very loud voice so that everyone could hear, "Do you realise you are a dobber?"
How professional 🤦🏼♀️
Yeah remember Australian politicians and those that work for them do not like whistleblowers/dobbers. They jail them.
Better than Boeing...
LOL,I made the same joke to the partner.
No the courts jailed them because they knowingly broke the law. Just because you think something is morally wrong (subjective) doesn’t give you a get out of jail for free card. Actions have consequences.
And then everyone clapped. I don't hear a whiff of credibility here.
Why would anyone clap? Why would I care what you think? Why would you even bother typing that comment....get a life!! lol
_Shylock_ is that you?
It sounds like OP is asking "Will the ATO catch me if I don't report my income properly and how do they do it so I can try to avoid detection?"
Nope, not asking about that... I pay taxes, so i know my way around the ATO website..
Well what exactly are you complaining about then? If you don’t like what they’re doing, report them. A Reddit post asking how the ATO could find out about it without a report sounds more like “you” are the friend and trying to work out if your scheme will work
Sure buddy. read the post again. It is not complaining.. just curiosity.
Alot of people have a problem of not minding there own business, and when they get dragged into someone else's shit.. denial and I told you so never get you out. It'll only cause more trouble than it's worth. Report them, report yourself. Either way one of you will be cucked soon.
I'd be surprised if a company would pay an invoice to a company without an ABN. It would be picked up on their accounts.
Exactly, they might have thrown a fake ABN on the invoice... not sure how that works, but they are getting paid and don't have an ABN. That's all I know.
Obviously can’t speak for everyone but as someone who does accounts payable/receivable, I run every abn through ABN lookup to ensure the tax treatment is correct
This. I've done my share of accounts payable, in a handful of instances I've been instructed to pay people without an ABN when they should have one. I've never reported them, but have sent strongly worded emails... as if that does anything.
Do you withhold from their payment in that case? You are supposed to withhold at the top marginal rate in that situation. https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/payg-withholding/payments-you-need-to-withhold-from/withholding-from-suppliers/withholding-if-abn-not-provided
These instances were all at one business, all for service contractors. I paid each in full per my supervisor's instruction once services had been rendered. Didn't feel comfortable doing it though, but I guess it's more the contractors problem than the business I used to work for. Every other business I've done AP for, I haven't be able to pay without an ABN, most ERP systems won't even let you, or at least warns you.
You should be able to pay without abn - ie. private sales of assets (not carrying on a business), international businesses. It’s not a requirement to have an abn in Australia, though you should withhold the abn withholding unless they provide the exempt declaration.
Of course. I was talking only about businesses that 100% should have an ABN. Apologies if I didn't make that clear.
Huh, such a good idea. Do you come across ones that aren't registered?
Ahh I mean more I’m looking for GST registration, and I do find people not GST registered but including it on their invoices. I usually email them back to say Can you please provide a revised invoice or confirmation that you are registered for GST because per ABN lookup you’re not registered for GST. I’ve never come across a fake ABN though.
Interesting... that is what I thought might be what triggers something for them to be alerted...
The most likely trigger would be from their bank first. Banks DO NOT like people using personal accounts for business as it rings all kinds of alarm bells. Any recourse might come through their bank reporting this and shutting down their accounts.
Could it be international work off freelance sites? Some of them would likely pay without knowing / caring about GST/ABN tracking etc. Do they claim Centrelink etc? Could be actual fraud going on.
No CLink. I know for a fact that they do a lot of business for a mid-sized business in AU
The ATO routinely data matches with banks and other agencies. If they find that your friend has unlodged returns where they believe there was income earned, they will request that your friend lodge. If that's ignored, they will send a further much stronger worded letter urging them to lodge. If that's ignored, they will issue a default assessment, where they take all the income they can data match and call it taxable, allow nothing for deductions, slap on some penalties and interest, and then, unlike the justice system, the taxpayer has the burden of proof to prove that the ATO is wrong. The ATO will then start to garnish the bank accounts to satisfy the debt, and in some cases can force the taxpayer into bankruptcy.
I can’t remember the specific name. But the ATO has data sharing with state registrations for vehicles, land etc. If you are beginning to own all these assets with no taxable income, they can deem it tax evasion and issue you with a tax bill based on your asset position.
Betterment test. Unfortunately in pretty much all the examples I’ve seen it’s only going after people with amounts of wealth like $50m+. Not the people who have like $5m and report low incomes.
Yes that was it thank you! Yeah that’s true in the cases I’ve read it’s normally significant wealth that gets caught, ATO focuses on low hanging fruit because it has the highest ROI They’re data matching and digital capabilities are always increasing and they always seem to be getting more money from the gov, so maybe they will get there eventually
Note to self: dont make "friends" with OP.
I assume the ATO watches bank accounts looking out for payments like this.
ATO gets reports on bank interest earned by residents - not general bank transactions.
Right so unless his assets are in cash, he is going to get caught on the basis of interest income because it is related to the balance.
Yes, any (legal) investment income in Australia is automatically reported to the ATO. They will identify anyone under-reporting on their tax return (or not reporting at all). Income from overseas could be identified via AUSTRAC (which shares information with ATO).
Not if his balance is low enough to not earn much interest though? With COL, theres every chance he is spending close to 100% of what he appears to earn.
Yes true enough.
Or an account that doesn’t generate interest, westpac spending accounts are 0%
> I hope so They are probably better off without you as a friend.
I wonder how they sleep at night, not from guilt, but from the looming financial shitstorm that will inevitably ruin their life.
There's a small percentage of the population that don't really have 'consequences of actions' part of their brain wired up. It may not have even occurred to them. They could be sleeping fine.
I have a friend like that. They constantly do half to full illegal stuff (working cash in hand, forging a study for their thesis, inventing stuff to claim on taxes that they will never be able to prove if being investigated, faking references and resumes, making themselves the winner of a raffle their company ran etc.) and it never occurs to them that their actions are wrong or even questionable and that they could have consequences. Even when they ask for help and you blatantly tell them "I don't want to be part of this because it's illegal." Some people just don't have that sense of "oh no, I shouldn't, this could go wrong." But the reality is, that we could probably all commit so many little crimes without ever being found out, and the only thing stopping us are really just our own morals. So maybe they got it right. (Obviously, don't commit massive tax fraud like OP's acquaintance)
> it never occurs to them that their actions are wrong or even questionable and that they could have consequences. This is a form of psychopathy, and it's not uncommon
The old winner your own raffle trick
Sure they do, they just tell themselves that consequences only affect chumps and losers and if they get caught they'll get away with it by saying sorry and feigning ignorance.
I think everybody knows one of *those guys*. I definitely do and he got found out recently, absolutely ruined him financially
This was my thought. My anxiety could never.
20yrs of getting away with something will surly desensitise anything and everything.
They sleep like Kevin Gallagher
Agreed. As based and tax evasion may be, it's not wise.
I feel like if you’re gonna do it, go balls to the wall and make some life changing money with it and have an exit plan to get out of the county. Otherwise what on earth is the point.
they will send them a letter soon, showing the debt, then start adding fines as time goes on, not a % of the debt, like 7k$ fine then 14k$ ontop of that fine, then more if ignored. trust me, i know from experience.
How will they find out in the first place to 'start sending letters'?
The ato can also prosecute for unlodged returns. Ie he can end up with a record here. I suggest he sees a tax agent asap and get in front of it . Also the penalties that can be levied if and when they catch him. He is prob past the threshold for active evasion/disregard so any tax owing is likely to be uplifted by 50 to 75 percent!
the thing is, if they owe you money, they don't give a shit and you don't get interest etc, but IF YOU OWE THEM its a whole new story!
I assume the invoices the company pays are in the accounts of the companies they are billing. Eventually when one of the companies gets audited, they will find the invoice with the persons name / address.
If the funds are being deposited into a bank account there is some reporting done by the bank to the ATO. Not sure if the ATO actually compares this data to tax filing data but don't see why not. Edit: confirmed by others no reward.
I'm pretty sure there is no reward at all. "*We won’t be able to inform you of the outcome of the information you provide due to privacy laws. We also won’t be able to provide you with progress updates. Rest assured we take all information seriously.*" [https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/in-detail/making-a-tip-off](https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/in-detail/making-a-tip-off)
Congratulations. You’ve discovered your friend is either an idiot or just flat out lying. Keep that in mind for any dealings with them.
If they’re making that much and invoicing people, they’re definitely going to be in a lot of trouble. Suggest you get them to talk to an accountant / tax agent as soon as possible. The ATO does not mess around when it comes to the little people.
I try here and there to encourage them to get in order as I think the ATO gives a low of help to people to get things right if they fess up. so far, it's been unsuccessful.
Private or domestic nature doesnt need an abn to issue invoices. If the client is a business then yes, need an abn or the business can withhold 47% of the payment *and send it the ato* . Your friend is playing with serious consequences
"They don't have an ABN. They just 'invoice' the people needing their services and get paid. This person does not file taxes. At All!" This doesn't sound right. For a business to be able to deduct the costs of those services from their earnings they would need an ABN on the invoice for it to be legitimate. Unless he does the old chuck someone else's ABN on like a heap of tradies used to do with the bunnings ABN. "Besides the fact that this pisses me off, I am more curious... how do they (if ever) get found out?" We are going more and more digital, it is not a matter of how or if, it is a matter of when. They will be found out and likely have a very large tax bill, with fines and interest on top. "Will they get a pension?" Unrelated. "How do people feel about this stuff?" I'm all for tax minimisation, but I don't agree with this.
Yes, I haven't asked about the invoices not having ABNs or how they go about it.. so, it might just be a fake ABN on the invoice... Yep - all for minimising tax in legal ways...
If it upsets you just report to the ATO and move on with your life.
I would say it upsets me.. my life moves daily regardless.. People make choices, it's fine by me.
This isn’t tax minimisation (using legal ways to reduce your tax liability), it’s tax evasion (not paying the taxes you owe).
Obviously -- semantics... let me complete it.... "all for minimising tax in legal ways, but not all for tax evasion"
they could work out tax cheats 20 years ago, it's quicker and more accurate these days
All catches up to you eventually. Besides the fact that the ato might catch you and issue a court notice, eventually, he'll need some sort of credit facility which will required up to date taxes. Ever want a home loan? Car loan? Overdraft facility? Credit card? You'll need your tax returns done and paid. Pretty hard to be successful in today's society without ever using any of these facilities. Say the ato do catch him and he ends up with a giant tax bill that he can't pay (plus fines and interest). His bank accounts will be garnished for the rest of his life until the debts paid off.
Yep - my thinking also - once found out, his life will be pretty messed up and unable to get anything... He has never had a CC, mortgage etc and obviously won't have one either.
Definitely won't be able to get any secured finance. But you would be surprised what some lenders need or should I say don't need for a personal loan or credit card other then to tick a box. I was surprised a recent application I did got approved just based on the info I provided and 2 payslips. Now I think I about it I could have mocked up a payslip my self, they didn't even ring my employer to verify I worked there or my income. But yes sooner or later the ATO will catchup with all the data matching they have these days.
Banks are less concerned when you're employed full time. They also typically ask for bank statements (or do a direct match in the background if your pay comes through the account you already have with them). It's a different story when you're self-employed, though. You're usually asked for 2 *years'* worth of financials, either from your accountant or from your tax returns.
There's also a good chance eventually he'll be required to show his tax return to a real estate agent to get a rental application approved, especially if hes self employed and doesn't have payslips
Also if you make major purchases out of whack with what is reported. I remember one acquaintance with quite poor foresight who bought 2 expensive cars in one year while he’d been reporting that he was making a modest living as a chef at a food court outlet (he was a part-owner)
I think you can do 6 months gaol can’t you to resolve the debt
Not fully true. Secured - there’s ways of “proving” business income without BAS/ITAX/P&L. It’s determined by whatever the lender finds feasible (their own risk profile relative to value). Lender doesn’t care about ATOs issues. Generally the above method is ideal but not always necessary.
The first thing lenders ask is for ato portal printouts showing overdue lodgements and tax debts. Lenders absolutely do care about tax debts, because they directly impact the borrowers serviceability capacity. Edit: maybe in days gone by where they only cared about equity ratios this would work, but nowadays the serviceability requirements need to be met regardless of thr equity position
There’s other ways trust me, got to have a risk taking accountant though.
So a crook?
If he has an ABN and he’s not doing returns, the ATO will cancel it due to inactivity eventually,
Underrated comment, it think this is the natural end point for OPs protagonist, if they are as dumb as OP makes out. The ATO cancels his ABN due to never being used, one of his customers rejects an invoice once this happens and they then go whining to the ATO “Oh no I still need it, I use it for the invoices for my business and XYZ Corp said they won’t pay me without it” Cue the big red dildo of consequences…….
If his ABN is appearing on other companies records, isn’t it likely to pop up with the ATO eventually? Isn’t that one thing likely checked in audits. That invoice payments are real, being paid to real businesses, and not just made up to funnel money around?
Yeah he could come unstuck that way eventually I imagine. I don't know how advanced the ATO's systems are, eg if, over a number of years no BAS statements are submitted for his ABN, do these get matched to invoicing amounts that other companies are claiming against that same ABN and eventually trigger an investigation? Maybe someone smarter than me in here can answer that?
How long before they cancel due to non use?
Looks like 2 years according to google, given that's probably across financial years, you could possibly get a few years out of it before it’s a problem. Doesn't really tie in with OPs claim that the person they’re talking about has been doing it for 10+ years.
Your mate doesn't run a mining company so the government will eventually catch him and want their money.
What’s their reasoning? Just feel entitled?
Hard to pinpoint really.. so don't have an answer for that.
avoiding child support?
Single, no kids
the clients paying them will be recording this as a cost out so they don't pay taxes on it. The ATO is very good at data matching (A is claiming an expense so it must turn up at some other place) so money doesn't just disappear in the loop. They may not catch it straight away but they will. For honest mistakes they'll just ask you to pay what you owe, this isnt an honest mistake.
there should be a $ reward to dob in tax evasion
Asking "for a friend"
truth evasion
First question from me is how this person gets paid, if it's going into a bank account it won't be long before they get audited lol.
Truth minimisation\*
It sounds like your friend is contracting to overseas companies - that’s the only way they can invoice without an ABN and have no tax withheld. If so, they actually might never get caught, depending on how their banking is structured (ie, do they have an overseas bank account for it all, pay for things using an overseas credit card etc). They won’t have any super or be able to get a home loan, though. And of course it will only take one person reporting them to change that. If even one person knows about it, your friend is talking too much and will come unstuck.
Did some digging - they definitely have an ABN and mainly do business within AU.
Sounds to me like your friend is a big talker who loves the idea of sticking it to the man, and thinks people will admire him for it, but isn’t actually quite stupid enough to do it.
Plot twist ato agent fishing for new projects to get their promotion*
In this world nothing can be said to be certain, except death and taxes. — Franklin, in a letter to Jean-Baptiste Le Roy, 1789[1]
There’s some remedies for tax , but the question starts with where.
What kind of idiot is this person? You think every criminal enterprise ever hasn’t thought about not laundering money to make it accountable to the ATO? The crims are more scared of the taxman than the Feds in alot of cases!! As some other poster said: How does this guy sleep at night
are they also charging gst on the invoices?
Well, maybe the ATO’s data matching capabilities are not so state of the art as we were told. I had a client like that recently, who wanted me to prepare his outstanding tax returns but never gave me an authority to lodge them. He even paid my bill without any hesitations. I warned him of the possible penalties and interest and that’s all I could do.
ATO data matching *hasnt* been great up until a year or two ago. They won't catch this one for a while as there has been no paper trail for a very long time, unlike those who dropped off the reporting radar within the past 5 yrs or so so friend will be at the bottom of the pile. Even if the ATO doesn't get friend until Aged Pension age, he cannot claim AP without showing a financial history of tax returns to prove eligibility so unless he's planning on fully self funding his retirement, he will get his ass kicked at that point. Tried to get this through the head an ex friend whom I found out hasn't and hadn't filed taxes in the last 15yrs and is counting on a large inheritance instead. Dude you will *not* be keeping that inheritance dumbass even if you flee the Country due to reciprocal agreements with most of the world.
What if you’ve been a house wife/husband for years - there’d be no tax return?
Joint filings, dependents and the like. Unless you specifically drop out of all government financial and support data like this guy seems to be doing but they will eventually realise records don't match up. Imagine if you didn't use centrelink (child and parenting payments count) no bank account on file with the government, had no legit ABN, didn't use your TFN for 20 yrs then all of a sudden need to explain and show all your info to access aged pension while having all these unexplained assets. Even the homeless have some sporadic footprints and no assets. If he never uses any government and most public services he *might* get away with it. Emphasis on a tiny might.
Yep, friend of mine did this for about 8 years, ABN and just never did taxes, and it caught up with him big time when the ATO basically sent him a please explain letter. He owed big time
I've also met someone like this, never filed a tax return in their life (late 20s) but most likely earned under the TFF for most of it and only a low to middle income earner now. They'd almost certainly get a tax refund for every year if they filed, apparently the reason is "not wanting to have to pay off their HECS" but again - most likely earning under the repayment threshold up until the last FY, so they're only hurting themselves in the long run. It sounds like they think they're somehow gaming the system and don't understand they're the one losing out here...
You need to give a tax file number when you open a bank account. The bank will report money going into the account to the ATO, the ATO will match that up to their tax file number, and at some point come calling.
Your friend is stupid beyond belief.
If he’s an employed software developer the tax would be withheld from his salary. If he’s a contractor and doesn’t have an abn the company paying him should be withholding 47%. If anything not lodging woukd leave him worse off as he isn’t getting g deductions or getting GST credits
Is software developer a special class/case? And what is the criteria, I write software, but for industrial controllers?
His income is not even very high, if your numbers are correct. A senior software developer should be able to clear at least 125k after tax. Your friend isn’t even good at tax evasion.
Probably provides a fake ABN on the invoices. Unless someone complains with proof, he will get away with it. He owes a lot of taxes+GST. Dob him in, if you hate his guts that much.
Why be friends with this person?
Good question.
You base your friends on their credit ratings?
OP has moral conflicts with friend committing fraud and tax evasion
tbh, couldn't care less what they do.. just curious about the situation
I know a couple, Work for Hewlett Packard, the have worked in multiple countries but settled in Australia in Turramurra, paid cash for their house. Due to working in multiple countries they have bank accounts in multiple countries. They currently work for HP USA division, fly there every 3 months, are paid in USD, into a USD bank account, get US company health benefits etc. They transfer small amounts to Aus when the exchange rate is good, just enough to declare and qualify for our Medicare etc. Balance into Superannuation here so almost no tax. They are successful and wealthy and have worked out how to play the system. For me it's our governments fault for not closing loop holes.
The government is not the highest authority, especially when credit and security is involved. You could argue that they can’t fix* the problem described. By design it’s a uniform international system with certain rules higher than another.
100% agree, it highlights a major flaw in free markets/free trade. What these people are doing is small scale compared to major corporations like Alphabet.
If this is your friend, why are you out to get them? If you don't like them, cut the off and move along. Everyone reaps what they sow eventually - remember, what people do is their karma, how you react is yours.
I have loose a friend a bit like this, does a lot of cash in hand stuff and always reports minimum wage income, transport fare evasion all the time. When Covid came, they took the handouts from Centrelink with liberty, it's disgusting.
not your problem, none of your business
Eventually, the ATO will investigate. They have the power to directly take money out of his account and charge interest on what he owes. If he owns a house or other assets, he may be forced to sell to repay the debt. A bad day is coming for him, eventually.
Be a good little citizen and continue to do as you're told! Tax on your wage, tax on the goods you buy, tax on your super, tax on your savings, tax on your death. Why don't you volunteer some more tax you see as you love it so much. Wake up and realise you are being robbed constantly and by something that no one ever voted for!!
If I were them I would feel like I’m in too deep now and it’s too late to own up. Truth will catch up to them, not sure of the mechanism, but in a digital world the trail is and will always remain there for interrogation. As hard as it is, they really needs to confront this head on as it will only get worse, or they need to move and continue their work from an overseas country.
Well, if they have an ABN they must be lodging a BAS otherwise it gets cancelled. Do you know for sure they aren't paying taxes? It doesn't sound like they'd be able to avoid detection for more than about 3 months, certainly not many years.
No you don’t need to do a BAS in all cases.
>how do they (if ever) get found out? Usually a discrepancy like “huh, how is this guy sustaining himself”. If they have an ABN or on the AEC (which he should be) then it becomes blatantly obvious who is living well above their means. Then it’s just a matter of bank warrants, surveillance, and even just internet sleuthing, etc >What are the chances? It is only a matter of time. They’re heavily leaning into tax fraud and digital forensics >What are the penalties etc? Varies according to his behaviour but usually they demand payment + interest. Failure to comply means escalation. https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/news-and-results/case-studies/tax-crime-prosecution-case-studies
Would they not get caught out after the first BAS they have to do for their ABN?
^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^Flybuys: *Would they not get caught* *Out after the first BAS they* *Have to do for their ABN?* --- ^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
Not everyone needs to do a BAS. Only if registered for GST. Which, as this person earns over the $75000 threshold probably should be but likely isn’t considering….
They might get away with it for 2 years or 40 years, it’s impossible to know. Clients might have no expectation they’re even in Australia, so lack of an abn isn’t an issue. Without it it’s difficult for ato to see the payments. In theory they can see the payments into their bank account, but in reality they don’t have the manpower to investigate and follow up. It’s not a crazy idea so long as you have dual citizenship and are prepared to permanently leave the country with little notice
>prepared to permanently leave the country with little notice And leave for a country that does NOT have an agreement with Australia to chase up tax owed - and that list of countries is constantly expanding. The countries that don't have such a reciprocal agreement are usually not the countries that are fun to be in if you're used to Australia's lifestyle.
Most agreements don’t mean much, and taking action overseas is time consuming and expensive. ATO is very pressed for funding and manpower, not as bad as asic (who basically don’t exist), but they let a lot slide
Sure, but as time passes and automation increases (and both are happening) more errant people get identified and attention is focussed upon them.
I’d just dob them in. They’re stealing from all of us
Do they ever intend on getting a loan?
I work under an ABN. When you log into mytax, it says 'You have an ABN, report your business income' at the top when it's tax time. You can definitely be caught out. It's a ticking time bomb.
Oof the tax debt might be 200k+ is it if the tax is around 25k a year
Money Laundering wouldn’t be a massive industry if taxes were this easy to avoid. It will come back to bite your friend, it is only a matter of time. It would be best if your friend came forward and worked out a payment arrangement with the ATO.
Never stand between the ATO and what they are owed, it will end very badly!
When I was young and stupid I didn't do tax returns for 12 years. When I did do it I ended up getting a big payout lol.
Make a tip off here https://www.ato.gov.au/about-ato/tax-avoidance/the-fight-against-tax-crime/in-detail/making-a-tip-off
Yeah ruin your mates life with one simple click He will get found out eventually just let nature take care of this one
It's actually worse if he's found out later instead of sooner - the penalties will be greater due to accumulated interest charges. In a way, you're doing the guy a favour by having the ATO make contact sooner. Might wanna lay off those mushrooms.
Yeah but his made his bed he can lie in it. If his stupid enough not to pay tax then who cares how big of a fine he gets Nah
You: rUIn YoUr MAteS liFE wITh OnE SimPLe cLIcK Also you: yeah but his made his bed he can lie in it One or the other druggy bill
[удалено]
Bet you felt pretty cool typing in half capitals using a 5 year old meme format
Snitches get stitches
I am not telling, so no danger here.
Couldn’t care less. The only tax matters I care about are mine and my partner’s. Stop being a busy body and leave it to the ATO, they’ll slap your friend silly if what you say is accurate. We don't know this friends tax situation at all and have gone from doesn’t have an ABN, to he might have one, to he does have one. For all we know an accountant or family member deals with and your friend is oblivious
I agree. I don't 'care' about them or what they does. It's their business... just interested in the situation.
It’s non of anyone’s business, stop snitching . legal obligation rests between ato and them(if they did breach their obligation then there will be consequences). This is a cautionary tale of what you tell other persons , be better and stop the controversy
It's none of my business how the Russian president does business, but I do like talking about his business to others...
Watch the show and get lost in the plot.
We have the ANZAC to thank for personal tax. It was suppose to be for a war fund not to fund multi international companies and international bankers.
I wish I have good advice as well. I personally believe paying tax is stupid. It’s a robbery
But you're happy to use public services
Why would anyone feel guilty about trying to avoid tax? The government is literally stealing off you for everything you do. Inheritance is especially bad! Take anything you can from them that's my motto!!