# Tax declarations



## Crash (28 December 2006)

I asked a mate of mine how he handles his tax in regards to share profits, he said I just dont declare them and hope they will never find out.  Is this just stupid? Or is there some significant chance this will be the case?


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## son of baglimit (28 December 2006)

he will be discovered - the ATO is on a major compliance cycle at the moment - all resources poured into it. 
not a good time to be trying to avoid tax.
minimise yes, avoid NO.


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## nizar (28 December 2006)

Crash said:
			
		

> I asked a mate of mine how he handles his tax in regards to share profits, he said I just dont declare them and hope they will never find out.  Is this just stupid? Or is there some significant chance this will be the case?




Once you are caught, you must:
*Pay back the money
*Get fined
*They will look at (ie.scrutinise) your tax returns the last 5 years

Oh he hasnt got those as well; so that means he will
*Pay tax for all the years for which he has evaded it
*And also a fine for those years as well


And you still get people saying that buying specs or day-trading is risky !


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## deftfear (28 December 2006)

The tax office can find out if you don't declare small amounts of interest, so I can't see why they wouldn't find out if shares are being sold. If any of the shares he owns pay dividends the tax office would be alerted to the fact that he owns shares and I'd say that would possibly put you in a higher risk category and they would take more of a look at their tax returns, just like they do with people with investment properties, certain industries (this includes accountants and lawyers)

I would think that eventually he would get caught out, he obviously has a broker he trades through, money going in and out of his bank accounts, and possibly a large share potfolio. It's never worth dodging the tax office, generally will catch up with you and as nizar said, you get slapped with a lot of fines and penalty interest.


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## krisbarry (28 December 2006)

Every bank account, share trading account is linked to the tax office anyway via your tax file number...he will get caught its just a matter of time.  Australia has the biggest super computers in the southern hemisphere data matching millions of records each and everyday.

What a dopey dick_head I say.

Declare it!


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## Smurf1976 (28 December 2006)

There's nothing wrong with minimising tax. That's just applying the law as it was intended. 

But tax evasion is an entirely different thing and can get you into LOTS of trouble. 

One good point about the tax system is that if you are having to pay tax on your share trading activities then you must be making a profit that exceeds that amount of tax you have to pay. So there's no excuse to not pay up.


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## finnsk (28 December 2006)

Of all the goverment agencies it is only the tax office that makes me worried all the police can do is to put you in jail the tax office can put a stop on all your bank accounts, house ect. then what are you going to do no access to your money or investments, and that can last for years


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## DOC (28 December 2006)

i recently encountered someone who attempted to evade her tax liability, and it was established that she was clearly aware of what she was doing.
The penalty was calculated at 150% of the tax liability, plus interest at about 13% going back to day one!!
As well as having a PERMANENT mark against her name with the ATO, they will be looking at her past and future returns.

bottom Line: its not worth it at all.

cheers
Doc

I DO NOT CLAIM TO GIVE ADVICE ON THIS MATTER. NOR AM I QUALIFIED TO DO SO. YOU SHOULD SEEK YOUR OWN INDEPENDANT TAX ADVICE.


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## Julia (28 December 2006)

Totally agree it would be just a matter of time before being caught.
Besides which, much as we all minimise our tax obligations within the law,
our society depends on the contribution of tax $ to provide benefits we all need.

Julia


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## marklar (28 December 2006)

I don't quote my TFN when the share registry paperwork comes in, not because I'm trying to avoid it but to ensure they do take the maximum amount out since I'm in the top tax bracket anyway.

m.


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## theasxgorilla (28 December 2006)

Smurf is right...paying tax means you are making money, but it's definately worth trying to correctly minimise it as much as possible.  Paying 46.5% (top tax bracket) on profits can be an awful handbrake to trade with.


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## chops_a_must (28 December 2006)

As long is there is a papertrail they can take you to the cleaners. I keep receipts and invoices to a minimum, but with share trading, I would imagine there are lots of ways they can get at you, seeing as everything has to be recorded.


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## niknah (28 December 2006)

In my last tax return I made a few mistakes and had sent the ato 2 extra amendments after I did the tax return.  This raised an eyebrow over there and they noticed problems with my tax from 5yrs back, so I have to redo that.

I suspect when this guy starts putting in the proper numbers in his taxes again they'll ask him about why those numbers were in his previous tax returns.

I know people who've had their tax audited and they tell me the ato is very exact, calculating every cent of interest, every receipt when they audit people.


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## KaiserBun (28 December 2006)

Assuming the person is not a share trader:

ATO is targeting capital gains as part of their compliance program (as stated by their new Commissioner).

As the ASX CHESS system basically records all transactions on ASX listed equity, it would not be long before the ATO uses this data to compare transactions to taxation returns. 

No capital gains declared on a return when transactions occur would be the easiest to detect. However, in my opinion, under declaring the capital gain would require a bit more man power by the ato.

For those who believe it cannot be done should look at their recent actions of acquiring data from the Land Title Offices from the State Governments. 

i could also imagine them using information from ASIC regarding share transactions on non listed companies. 

Having worked in an accounting firm, i have seen a person caught out by the ATO. Initial audit was on one year, and they kept going back finding more and more. Ended up being an audit on 12 tax returns.

When it is a deliberate act, ATO is no limited to the general 4 year rule (which i believe is now 2 years under the Review of Self Assessment). 

If ATO believe it is a serious enough action, matter referred to the Crime Commission (as seen with offshore tax evasion cases)

However, it is more likely they will seek the tax owing on the under declared income, apply a penalty based on the tax owing, and apply a compounded interest from when the money should have been paid. 

If you dont pay up, then they will take legal action, including arranging garnishees from a persons source of income. Their main aim is o get the money owing to them, however, if a person doesnt play ball, they can freeze assets, call creditor meetings and make someone bankrupt. (check out their guidelines on debt recovery on their website).

PS for those who want to see the new arrgessive tax office in action, they may want to check out the JMA Accounting vs Carmody case on their legal database. They did over step their authority, but it is clear that they have changed from 'educator' to 'i am carrying a very big stick' 

Happy new year to all!


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## Smurf1976 (28 December 2006)

Not long ago I finally received my tax assessment for 2004-05.

What took so long? They decided to investigate my trading and I had to write several pages of explanation of what, exactly, I had been doing. Nothing wrong with my tax return at all, they just decided to check it out.

Sooner or later the odds are the ATO will look at your tax return in detail. If there's anything even slightly suspicious you'll be subject to a proper investigation. Nothing to fear if you've done everything properly. But if you haven't...


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## nizar (29 December 2006)

KaiserBun said:
			
		

> but it is clear that they have changed from 'educator' to 'i am carrying a very big stick'




LOL!


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