A former tax agent has been sentenced to five years behind bars after pleading guilty to stealing over $4.1 million from his SME clients as well as the tax office.
Richard Hogg, 56, was handed the jail term in Melbourne's County Court after he promoted a tax avoidance scheme to a group of 40 clients, many of whom were SME owners.
A community tip-off alerted the ATO that something was amiss; investigations into erroneous transactions led to the fraud being uncovered, amounting to more than $4.1 million worth of funds being obtained.
“In this case, our sophisticated approach to data matching enabled us to easily identify transactions which didn’t quite look right and to act swiftly to investigate them further,” ATO deputy commissioner Will Day said following the verdict.
“By analysing Mr Hogg’s client list, we quickly identified 40 taxpayers out of his 1600 clients who were likely to have participated in the scheme.
“As a result, we were able to contact those taxpayers individually and work with them to correct their past tax returns, and to get their tax affairs back in order.”
Most of the affected taxpayers made voluntary disclosures, the ATO said, and received “reduced or no penalties as a result”.
My Business asked the ATO why anyone making a voluntary disclosure would face penalties at all.
“A reduction in a penalty of up to 80 per cent may apply for voluntary disclosures. The law provides us with the discretionary power to remit (partially or in full) interest charges and penalties in certain circumstances,” a spokesperson replied.
“A penalty is imposed on the tax shortfall amount depending upon the behaviour involved.”
Mr Day said the jail term “is testament to the ATO’s resolve to uncover and prosecute the most egregious tax crimes”.
“The stories which have been told to the court during this trial demonstrate Mr Hogg’s complete disregard for the best interests of his clients and for honest Australian taxpayers who pay their fair share,” he said.
In March this year, another tax agent was sent to jail for seven years for falsifying 161 BAS and tax returns belonging to 31 of his clients, which netted him over $875,000.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.