Claiming repairs done by family members

Evasion and avoidance has no time limits for review. A ticking bomb ?

Thank you Paul. What do you mean by the above phrase?

 

fraud or deliberate evasion has no time limits

basically the arrangement needs to be the same as any other commercial transaction.

if a taxpayer had wifey billing for administrative she never did then fraud and no time limit. if taxpayer had wifey billing for maintenance work she actually did do but wasnt qualified to do then ato may argue non deductible. fraud or deliberate evasion not really in play here. its a mistake but an honest one. probably get hit with initially recklessness and then degraded down to failure to take reasonable care.

 

Thank you very much for the clarification Mike.

 

Fraud and evasion for tax purposes doesnt have to have that same criminal culpability we often think of . Evasion means to avoid (ie not pay the tax otherwise due) and even a reckless or ignorant act may be considered a form of evasion meaning time limits to amend remain open. Most taxpayers think of evasion as requiring a planned and deliberate act but thats not correct. At its highest offence yes it may and can also be considered a crime under the Crimes Act. The government wrote tax law and it does tend to favour the ATO and not taxpayers in a dispute as there is a presumption of guilt which the taxpayer must then defend.

As Mike has indicated there is a scale of penalty and the ATO determines where it thinks it sees a specific taxpayer. A scheme to access atax benefit under Part IVA using a spouse could be reckless but may also be construed as a scheme and a pre-planned outcome and a higher penalty imposed. Obtaining personal tax advice can scale a penalty down too.