What is the Law and Penalties for Tax Evasion Fraud?


It is reported that a 27-year-old woman has made false statements in her income tax returns claiming refunds over a three years period, benefiting over $45,000 from the Australian Taxation Office (ATO).

While working as a chef at a Queensland hospital, it is reported that Ms. Helen Feulufai was provided work uniform, protective equipment and requisite tools by the hospital for her to conduct her course of employment in the role of a chef.

Further, while the chef position did not involve travel, or to use her personal vehicle, she fraudulently claimed travel and clothing expenses as work-related deductions.

In addition to this, she also claimed fraudulent charity donations all in the 2016-2018 financial income tax return years.

In fact, in the 2016 financial year, she claimed a tax refund of $16,970. In the 2017 financial year, she claimed $14,417, while claiming a further $13,691 tax refund in the 2018 financial year.

Eventually, the ATO caught up with her.

Helen was eventually charged with 3 criminal offences of fraud and she appeared at the Brisbane Magistrates Court for making false statements in her income tax returns.

She was guilty and convicted by the court which ordered that she not only repay the $45,000 but she was also fined $3,000 and further $20,000 to the Taxation Commissioner including court costs.

Peter Vujanic, Assistant Commissioner is reported saying, “This case also serves as an important reminder that you must be able to provide valid deductable expenses in your income tax return- including travel and clothing expenses as well as any charitable donations”.

In fact, over 3.6 million people have been reported making work-related expenses in 2018, claiming a sum of over $7.2 billion.

Close to $1.5 billion in total expenses are directly related to approximately 6 million people claiming work-related clothing and laundry in 2018.

The Australian Taxation Office (ATO) have the power to impose administrative penalties involving fines for making false or misleading statement(s), failing to lodge returns on time, or failing to meet other tax requirements.

Aside from that, there are heavy penalties of a criminal nature for those who commit fraud against a commonwealth entity such as the Australian Taxation Office (ATO) or Centrelink, which require the offender to face court.

These penalties generally apply across Australia.

Click here for an outline on ATO approved work-related deductions we can legally claim.

What are the Penalties for ATO Tax Fraud and Tax Evasion?

Section 134.2 Obtaining Financial Advantage by Deception Against Commonwealth Entity

A common charge people who commit a tax fraud or ATO fraud offence is section 134.2 Criminal Code Act 1995 (Clth) of obtaining a financial advantage by deception which carries a maximum penalty of up to 10-years imprisonment.

A person charged with this crime will be guilty if and only if the prosecution can prove each of the following elements beyond reasonable doubt in court:

  1. The accused person’s conduct involved “deception”. This includes doing an act that results in the financial benefit; and
  2. The accused person’s deception caused about the financial advantage he/she received; and
  3. That financial benefit was obtained from a Commonwealth entity such as the ATO or Centrelink; and
  4. The accused person’s conduct was dishonest conduct. For example, he/she was aware that what he/she was doing was wrong or was not entitled to do; and
  5. The accused person, at the time of doing this, was aware of a substantial risk that he/she would be benefiting a financial advantage yet took the risk of committing the deceptive conduct anyway.

“Deception” is defined in the criminal code as an intentional or reckless deception, whether by words or other conduct, and whether as to fact or as to law, including a deception as to the intentions of the person using the deception or any other person, and conduct by a person that causes a computer, machine or electronic device to make a response that the person isn’t authorised to cause it to do.

“Dishonesty” is also defined in the criminal code as dishonest according to standards of ordinary people and known by the accused person to be dishonest according to those standards of ordinary people. When determining if the conduct is dishonest, the court will essentially decide on this as a matter of fact.


Section 135.2 Obtaining Financial Advantage from Commonwealth Entity

An alternative offence to the above which carries a maximum penalty of 12-months imprisonment is section 135.2 Criminal Code 1995 (Clth) of obtaining financial advantage.

Here, a person charged will be guilty if and only if the prosecution can prove each of the following elements beyond reasonable doubt in court:

  1. The accused person commits conduct that results in him/her receiving a financial advantage from a Commonwealth entity such as the ATO or Centrelink; and
  2. The accused person at the time of engaging in such conduct knew or believed that he/she wasn’t eligible to receive the financial advantage.

A person charged with either of the above ATO or Centrelink offences will be found not guilty by a court if the prosecution fail to prove each of the elements of the charge in court.

Some common defences that if applicable will result in the accused person being found not guilty and acquitted of the charge include:

In some cases, an accused may have a strong defence of arguing that the prosecution has not proven that he/she was aware of a substantial risk that he/she would benefit financially from committing the deceptive conduct. Often, this will be inherent if a deceptive conduct is proven.

About Jimmy Singh

Mr. Jimmy Singh is the Principal Lawyer at Criminal Defence Lawyers Australia - Leading Criminal Lawyers in Sydney, Delivering Exceptional Results in all Australian Criminal Courts.


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