The Act creates serious criminal offences (up to 10 years’ imprisonment or large fines) for arranging, facilitating or knowingly entering transactions intended to make a company or trustee unable to pay specified Commonwealth taxes. It targets arrangers, advisers and participants, while companies/trustees remain the liable entities.
It applies beyond income tax to other Commonwealth taxes via mapped provisions, relies on Commissioner certificates as evidence, allows courts to stay proceedings until tax liability is final, and lets courts order payment on conviction.
The Crimes (Taxation Offences) Act 1980 establishes a suite of criminal offences aimed at preventing arrangements or transactions that have the effect (or likely effect) of rendering a company or trustee unable to meet its taxation liabilities. At its core, the Act criminalises conduct where a person enters into, aids, or is concerned in an arrangement or transaction with the knowledge or belief that it will secure the inability (or likely inability) of a company or trustee to pay tax, having regard to the entity's other debts (s 5(1), s 6(1), s 7(1)).
Section 3 provides an exhaustive interpretation framework. "Income tax" is defined expansively in s 3(1) to encompass not only tax imposed and assessed under the Income Tax Assessment Act but also additional tax, instalments, provisional tax, withholding amounts under Schedule 1 to the Taxation Administration Act 1953, and various former provisions. Parallel definitions exist for "fringe benefits tax", "petroleum resource rent tax", "superannuation guarantee charge", "GST", "wine tax", and "luxury car tax". The term "company" excludes partnerships but includes all corporate and unincorporated bodies. "Trustee" is broadened to include restructuring practitioners under the Corporations Act 2001, liquidators, and any person acting in a fiduciary capacity.
Part II contains the foundational offences. Section 5(1) creates an offence where a person enters an arrangement or transaction intending to secure that a company or trustee (whether or not a party) will be unable, or likely unable, to pay income tax already payable. Section 5(2) extends this to future income tax where such tax later becomes due. Section 6 addresses aiding, abetting, counselling, procuring, or being concerned in such arrangements where the person knows or believes the intention exists. Section 7 is broader still, capturing any person who enters, aids, or is concerned in an arrangement knowing or believing it secure (or is likely to secure) the inability to pay, without requiring proof of the principal's intention.
Current sections
Direct links to the current provisions in Crimes (Taxation Offences) Act 1980.
27
Part I
Preliminary
Part I—Preliminary
1
Short title
1 Short title
This Act may be cited as the Crimes (Taxation Offences) Act 1980.
2
Commencement
2 Commencement
This Act shall come into operation on the day on which it receives the Royal Assent.
3
Interpretation
3 Interpretation
(1) In this Act, unless the contrary intention appears:
Australian installation means an installation (within the meaning of the Customs Act 1901) that is deemed by section 5C of the Customs Act 1901 to be part of Australia.
Commissioner means the Commissioner of Taxation.
company includes all bodies or associations corporate or unincorporate, but does not include partnerships.
Deputy Commissioner means a Deputy Commissioner of Taxation.
fringe benefits tax means:
(a) fringe benefits tax imposed by the Fringe Benefits Tax Act 1986, as assessed under the Fringe Benefits Tax Assessment Act;
(b) additional tax payable under section 93 or subsection 112B(4) of the Fringe Benefits Tax Assessment Act; and
(c) an instalment of fringe benefits tax payable under Division 2 of Part VII of the Fringe Benefits Tax Assessment Act.
Fringe Benefits Tax Assessment Act means the Fringe Benefits Tax Assessment Act 1986.
GST has the meaning given by section 195‑1 of the GST Act.
GST Act means the A New Tax System (Goods and Services Tax) Act 1999.
GST law has the meaning given by section 195‑1 of the GST Act.
income tax means:
(a) income tax, imposed as such by any Act, as assessed under the Income Tax Assessment Act; and
(aa) any amount payable to the Commissioner under former Part IIIAA of the Income Tax Assessment Act; and
(b) additional income tax payable under former section 163AA, former section 170AA, subsection 204(3), former subsection 221AZMAA(1), former subsection 221AZP(1), former subsection 221YD(3), former section 221YDB or former Part VII of the Income Tax Assessment Act; and
(c) an instalment of income tax payable under former Division 1A of Part VI of the Income Tax Assessment Act; and
(ca) any initial payment of income tax that is required to be made under former Division 1B of Part VI of the Income Tax Assessment Act; and
(cb) any amount payable to the Commissioner under former Division 1C of Part VI of the Income Tax Assessment Act;
(d) any amount payable under former section 220AAE, 220AAM or 220AAR, or former subsection 221EAA(1), of the Income Tax Assessment Act; and
(f) any amount of provisional tax payable under former Division 3 of Part VI of the Income Tax Assessment Act; and
(g) any amount payable to the Commissioner under former subsection 220AS(1) or 221YHH(1), former subsection 221YHZC(3) or 221YHZD(1), (1A) or (1B), former subparagraph 221YHZD(2)(b)(ii), former subsection 221YN(1) or (4), 221YQ(1), 221ZC(1) or (4), 221ZD(1), 221ZN(1) or 221ZO(1) or former section 221ZP of the Income Tax Assessment Act; and
(ga) any amount payable to the Commissioner under Subdivision 16‑A or 16‑B in Schedule 1 to the Taxation Administration Act 1953; and
(h) an amount payable to the Commissioner under Division 8 or 9 of Part VI of the Income Tax Assessment Act; and
(i) an amount payable to the Commissioner under Division 45 in Schedule 1 to the Taxation Administration Act 1953.
Income Tax Assessment Act means the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997.
luxury car tax has the meaning given by section 27‑1 of the Luxury Car Tax Act.
Luxury Car Tax Act means the A New Tax System (Luxury Car Tax) Act 1999.
luxury car tax law has the meaning given by section 27‑1 of the Luxury Car Tax Act.
petroleum resource rent tax means:
(a) tax imposed by any of the following:
(i) the Petroleum Resource Rent Tax (Imposition—General) Act 2012;
(ii) the Petroleum Resource Rent Tax (Imposition—Customs) Act 2012;
(iii) the Petroleum Resource Rent Tax (Imposition—Excise) Act 2012;
as assessed under the Petroleum Resource Rent Tax Assessment Act 1987; and
(b) additional tax payable under section 85 of the Petroleum Resource Rent Tax Assessment Act; and
(c) an instalment of tax payable under Division 2 of Part VIII of the Petroleum Resource Rent Tax Assessment Act.
Petroleum Resource Rent Tax Assessment Act means the Petroleum Resource Rent Tax Assessment Act 1987.
Second Commissioner means a Second Commissioner of Taxation.
secure includes achieve the result.
Superannuation Guarantee (Administration) Act means the Superannuation Guarantee (Administration) Act 1992.
superannuation guarantee charge means charge imposed by the Superannuation Guarantee Charge Act 1992, as assessed under the Superannuation Guarantee (Administration) Act, and includes additional superannuation guarantee charge payable under section 49 or Part 7 of the Superannuation Guarantee (Administration) Act.
trustee, in addition to every person (including a company) appointed or constituted trustee by act of parties, by order or declaration of a court or by operation of law, includes:
(a) an executor or administrator, restructuring practitioner (within the meaning of the Corporations Act 2001), guardian, committee, receiver or liquidator; and
(b) every person (including a company) having or taking upon himself or herself the administration or control of income or property affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control or management of the income or property of a person under any legal or other disability.
Wine Equalisation Tax Act means the A New Tax System (Wine Equalisation Tax) Act 1999.
wine tax has the meaning given by section 33‑1 of the Wine Equalisation Tax Act.
wine tax law has the meaning given by section 33‑1 of the Wine Equalisation Tax Act.
(2) In this Act:
(a) a reference to income tax payable by a company or trustee, in relation to the intention of a person in entering into, or the knowledge or belief of a person concerning, an arrangement or transaction, shall be read as a reference to some or all of the income tax due and payable by the company or trustee at the time when the arrangement or transaction is entered into;
(b) a reference to future income tax payable by a company or trustee, in relation to the intention of a person in entering into, or the knowledge or belief of a person concerning, an arrangement or transaction, shall be read as a reference to some or all of:
(i) the income tax (if any) that will become payable by the company or trustee, after the arrangement or transaction is entered into, in relation to transactions entered into, operations carried out and acts done by the company or trustee before the arrangement or transaction is entered into; and
(ii) the income tax that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into:
(A) in relation to likely transactions, operations and acts of the company or trustee; or
(B) by reason of the Commissioner altering the sale value of goods in pursuance of a power to do so conferred on him or her by the Income Tax Assessment Act; and
(c) a reference to income tax moneys, in relation to a company or trustee, shall be read as a reference to:
(i) the income tax payable by the company or trustee;
(ii) further income tax payable by the company or trustee under the Income Tax Assessment Act;
(iii) additional tax payable by the company or trustee under the Income Tax Assessment Act;
(iv) costs awarded by a court against the company or trustee in a proceeding by the Crown for the recovery of a penalty under the Income Tax Assessment Act; and
(v) costs awarded by a court against the company or trustee in a proceeding for the recovery of income tax, further income tax referred to in subparagraph (ii) or additional tax referred to in subparagraph (iii) payable by the company or trustee.
(3) In this Act, a reference to securing the inability or likely inability of a company or trustee to pay income tax payable by the company or trustee or future income tax payable by the company or trustee shall be read as including a reference to securing the continuation of an inability or likely inability of a company or trustee to pay income tax payable by the company or trustee or future income tax payable by the company or trustee, as the case may be.
(4) In this Act:
(a) a reference to a person shall, unless the contrary intention appears, be read as not including a reference to a company;
(b) a reference to an arrangement or transaction shall be read as including a reference to both an arrangement and a transaction and to any series or combination of arrangements or transactions or arrangements and transactions;
(c) a reference to a person who aids, abets, counsels or procures another person to enter into an arrangement or transaction shall be read as including a reference to a person who, jointly with another person or other persons, aids, abets, counsels or procures some person to enter into an arrangement or transaction;
(d) a reference to an arrangement shall be read as a reference to an arrangement, agreement, understanding or scheme:
(i) whether formal or informal;
(ii) whether express or implied; and
(iii) whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(e) a reference to income tax, income tax moneys or future income tax payable by a trustee shall be read as a reference to income tax, income tax moneys or future income tax payable by a person (including a company) in the capacity of a trustee, whether or not the person is personally liable for the income tax or income tax moneys or will be personally liable for the future income tax, as the case may be.
(5) For the purposes of subsection 10(2), section 11 and section 12, the liability of a company or trustee to pay income tax moneys in respect of a particular act or transaction shall not be taken not to be finally determined by reason only of the possibility of the Commissioner determining that further income tax is payable in relation to that act or transaction.
3A
Extension to external Territories and Australian installations
3A Extension to external Territories and Australian installations
This Act extends to every external Territory and to Australian installations.
4
Secrecy
4 Secrecy
Division 355 in Schedule 1 to the Taxation Administration Act 1953 has effect as if this Act were part of that Act.
Part II
Offences relating to income tax
Part II—Offences relating to income tax
Note: The offences in this Part are applied to other taxes by the later Parts of this Act. These taxes are:
Note: (c) fringe benefits tax (see Part IV);
Note: (d) petroleum resource rent tax (see Part V);
Note: (f) superannuation guarantee charge (see Part VII);
Note: (g) goods and services tax (see Part VIII);
Note: (h) wine equalisation tax (see Part IX);
Note: (i) luxury car tax (see Part X).
5
Arrangements to avoid payment of income tax
5 Arrangements to avoid payment of income tax
(1) Where a person enters into an arrangement or transaction with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay income tax payable by the company or trustee, the person commits an offence.
(2) Where:
(a) a person enters into an arrangement or transaction with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay future income tax payable by the company or trustee; and
(b) income tax becomes due and payable by the company or trustee;
the person commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
6
Aiding and abetting
6 Aiding and abetting
(1) Where a person:
(a) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(b) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction is being entered into by the other person with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay income tax payable by the company or trustee, the first‑mentioned person commits an offence.
(2) Where:
(a) a person:
(i) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(ii) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction is being entered into by the other person with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay future income tax payable by the company or trustee; and
(b) income tax becomes due and payable by the company or trustee;
the first‑mentioned person commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
7
Arrangements to secure inability to pay income tax
7 Arrangements to secure inability to pay income tax
(1) Where a person:
(a) enters into an arrangement or transaction;
(b) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(c) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction will secure, or will be likely to secure, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay income tax payable by the company or trustee, the first‑mentioned person commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
(2) Where:
(a) a person:
(i) enters into an arrangement or transaction;
(ii) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(iii) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction will secure, or will be likely to secure, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay future income tax payable by the company or trustee; and
(b) income tax becomes due and payable by the company or trustee;
the first‑mentioned person commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
(3) Where:
(a) a company or trustee:
(i) enters into an arrangement with a creditor for payments to be made, during a limited period, to the creditor by the company or trustee or by a person (including a company) at the direction of the company or trustee; or
(ii) enters into a transaction that involves the company or trustee making a payment to, or directing a person (including a company) to make a payment to, a creditor of the company or trustee; and
(b) the company or trustee enters into the arrangement or transaction with the intention:
(i) of securing, or attempting to secure, that the company or trustee will be able to continue to carry on business; or
(ii) of obtaining a financial benefit for the company or trustee;
neither subsection (1) nor subsection (2) applies to or in relation to that arrangement or transaction.
(4) In subsection (3), a reference to a creditor of a company or trustee, in relation to an arrangement or transaction entered into by the company or trustee, shall be read as including a reference to a person (including a company) to whom money is payable by the company or trustee under, or by virtue of, the arrangement or transaction.
8
Offences in relation to particular transactions
8 Offences in relation to particular transactions
Where:
(a) a company or trustee enters into a transaction by way of selling or leasing goods to a person (including another company) in such circumstances that income tax will become payable by the company or trustee in relation to the transaction;
(b) a person is, in any way, by act or omission, directly or indirectly, concerned in, or party to, the entry by the company or trustee into that transaction knowing, or having reasonable grounds for believing:
(i) that, or that it is likely that:
(A) the sale value of the goods, for the purposes of the Income Tax Assessment Act, will be altered by the Commissioner in pursuance of a power to do so conferred on him or her by some one or other of those Acts; or
(B) in a case to which clause (A) does not apply—the whole, or a substantial part, of the price payable for selling or leasing the goods has been, or is to be, paid to a person (including a company) other than the first‑mentioned company or trustee otherwise than on account of the first‑mentioned company or trustee, whether or not as agent for the first‑mentioned company or trustee;
(ii) that income tax will become payable in relation to the transaction; and
(iii) that, if income tax becomes due and payable in relation to the transaction, the company or trustee will be unable, or will be likely to be unable, at the time when the income tax becomes due and payable, to pay some or all of the aggregate of:
(A) the income tax that will then be payable by the company or trustee in relation to the transaction;
(B) the income tax (if any) that will then be payable by the company or trustee in relation to the previous transactions, operations and acts of the company or trustee (if any); and
(C) the income tax that may reasonably be expected by the person first mentioned in this paragraph to be then payable by the company or trustee by reason of the Commissioner altering the sale value of any goods in pursuance of a power to do so conferred on him or her by the Income Tax Assessment Act; and
(c) income tax becomes due and payable by the company or trustee in relation to the transaction;
the person first mentioned in paragraph (b) commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
9
Prosecutions and convictions
9 Prosecutions and convictions
(2) A prosecution for an offence against this Act may be commenced at any time.
(3) A person is not liable to be convicted of two or more offences against this Act in relation to the same arrangement or transaction.
10
Evidence
10 Evidence
(1) In proceedings under this Act (including proceedings for the purpose of obtaining an order under section 12), a certificate purporting to be signed by the Commissioner, a Second Commissioner or a Deputy Commissioner and stating that an amount of income tax moneys is or was, or became, due and payable by a company, or by a trustee, on a date specified in the certificate is, subject to subsection (2), conclusive evidence of the matters stated in the certificate.
(2) Where:
(a) a certificate is given by the Commissioner, a Second Commissioner or a Deputy Commissioner under subsection (1) stating that an amount of income tax moneys is or was, or became, due and payable by a company or by a trustee; and
(b) before the certificate was given, it was finally determined, or after the certificate was given it is finally determined, for the purposes of the Income Tax Assessment Act, that the income tax moneys, or part of the income tax moneys, to which the certificate relates did not become payable by the company or trustee;
the certificate is of no effect, or ceases to have effect, as the case requires, in so far as it would, apart from this subsection, be conclusive evidence that the income tax moneys or the part of the income tax moneys, as the case may be, referred to in paragraph (b) were or was, or became, due and payable by the company or trustee on the date specified in the certificate.
(3) A reference in subsections (1) and (2), in relation to a company or trustee, to income tax moneys shall be read as a reference to income tax moneys in respect of which a notification (however described) has been given to the company or trustee under the Income Tax Assessment Act.
11
Stay of proceedings
11 Stay of proceedings
(1) Where, in any proceedings under this Act (including proceedings for the purpose of obtaining an order under section 12), it appears to the court or magistrate that:
(a) the liability of a company or trustee in respect of some income tax moneys has not been finally determined for the purposes of the Income Tax Assessment Act; and
(b) the final determination of the liability of the company or trustee in respect of those income tax moneys is relevant to the determination of the question whether a person is guilty of an offence against this Act;
the court or magistrate shall stay the proceedings under this Act until:
(c) the liability of the company or trustee in respect of those income tax moneys is finally determined; or
(d) it is finally determined that the company or trustee became liable to pay some of those income tax moneys;
whichever first occurs.
(2) Nothing in this section limits the power of a court or magistrate under any other law to order a stay of proceedings.
12
Additional penalty
12 Additional penalty
(1) Where a person is convicted of an offence against this Act in relation to a company or trustee, the court may, in addition to imposing a penalty in respect of the offence, order the person to pay to the Commonwealth such amount as the court thinks fit but not exceeding the amount of the income tax moneys due and payable by the company or trustee on the date of the conviction, other than income tax moneys the liability of the company or trustee to pay which is not finally determined for the purposes of the Income Tax Assessment Act.
(2) Upon payment of an amount in satisfaction or part satisfaction of an order made under subsection (1) in relation to the income tax moneys payable by a company or trustee:
(a) if the income tax moneys payable by the company or trustee at the time the payment is made exceeds the amount of the payment—the income tax moneys so payable shall be deemed to be reduced, in such manner as the Commissioner determines, by an amount equal to the amount of the payment; or
(b) in any other case—the liability of the company or trustee in respect of the income tax moneys at the time the payment is made shall be deemed to be discharged.
Part IV
Offences relating to fringe benefits tax
Part IV—Offences relating to fringe benefits tax
14
Application of Part I and Part II in relation to fringe benefits tax
14 Application of Part I and Part II in relation to fringe benefits tax
(1) Without prejudice to their effect apart from this section, subsection 3(3), paragraph 3(4)(e) and the provisions of Part II (other than section 8 and subsection 10(3)) also have the effect they would have if:
(a) a reference in any of those provisions to income tax were a reference to fringe benefits tax;
(b) a reference in any of those provisions to future income tax were a reference to future fringe benefits tax;
(c) a reference in any of those provisions to the Income Tax Assessment Act were a reference to the Fringe Benefits Tax Assessment Act; and
(d) a reference in any of those provisions, in relation to a company or trustee, to income tax moneys were a reference to fringe benefits tax moneys.
(2) For the purposes of the application of the provisions of Part II (other than section 8 and subsection 10(3)) in accordance with subsection (1) of this section:
(a) a reference in any of those provisions to the fringe benefits tax payable by a company or trustee, in relation to the intention of a person entering into, or the knowledge or belief of a person concerning, an arrangement or transaction shall be read as a reference to some or all of the fringe benefits tax due and payable by the company or the trustee at the time when the arrangement or transaction was entered into;
(b) a reference in any of those provisions to future fringe benefits tax payable by a company or trustee, in relation to the intention of a person entering into, or the knowledge or belief of a person concerning, an arrangement or transaction shall be read as a reference to some or all of the fringe benefits tax that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into;
(c) a reference in any of those provisions, other than subsections 10(1) and (2), in relation to a company or trustee, to fringe benefits tax moneys shall be read as a reference to:
(i) fringe benefits tax payable by the company or trustee; and
(ii) costs ordered by a court against a company or trustee in a proceeding for the recovery of fringe benefits tax; and
(d) a reference in subsection 10(1) and (2) to fringe benefits tax moneys shall be read as a reference to fringe benefits tax that has been assessed under the Fringe Benefits Tax Assessment Act.
(3) For the purposes of the application of subsection 10(2), section 11 and section 12 in accordance with the preceding provisions of this section, the liability of a company or trustee in respect of fringe benefits tax moneys that have been assessed shall not be taken not to be finally determined by reason only of the possibility of the Commissioner amending the assessment (otherwise than as a result of an objection being allowed or to give effect to a decision of the Administrative Review Tribunal or a court).
Part V
Offences relating to petroleum resource rent tax
Part V—Offences relating to petroleum resource rent tax
15
Application of Part I and Part II in relation to petroleum resource rent tax
15 Application of Part I and Part II in relation to petroleum resource rent tax
(1) Without prejudice to their effect apart from this section, subsection 3(3), paragraph 3(4)(e) and the provisions of Part II (other than section 8 and subsection 10(3)) also have the effect they would have if:
(a) a reference in any of those provisions to income tax were a reference to petroleum resource rent tax;
(b) a reference in any of those provisions to future income tax were a reference to future petroleum resource rent tax;
(c) a reference in any of those provisions to the Income Tax Assessment Act were a reference to the Petroleum Resource Rent Tax Assessment Act; and
(d) a reference in any of those provisions, in relation to a company or trustee, to income tax moneys were a reference to petroleum resource rent tax moneys.
(2) For the purposes of the application of the provisions of Part II (other than section 8 and subsection 10(3)) in accordance with subsection (1) of this section:
(a) a reference in any of those provisions to the petroleum resource rent tax payable by a company or trustee, in relation to the intention of a person entering into, or the knowledge or belief of a person concerning, an arrangement or transaction shall be read as a reference to some or all of the petroleum resource rent tax due and payable by the company or the trustee at the time when the arrangement or transaction was entered into;
(b) a reference in any of those provisions to future petroleum resource rent tax payable by a company or trustee, in relation to the intention of a person entering into, or the knowledge or belief of a person concerning, an arrangement or transaction shall be read as a reference to some or all of the petroleum resource rent tax that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into;
(c) a reference in any of those provisions, other than subsections 10(1) and (2), in relation to a company or trustee, to petroleum resource rent tax moneys shall be read as a reference to:
(i) petroleum resource rent tax payable by the company or trustee; and
(ii) costs ordered by a court against a company or trustee in a proceeding for the recovery of petroleum resource rent tax; and
(d) a reference in subsections 10(1) and (2) to petroleum resource rent tax moneys shall be read as a reference to petroleum resource rent tax that has been assessed under the Petroleum Resource Rent Tax Assessment Act.
(3) For the purposes of the application of subsection 10(2), section 11 and section 12 in accordance with the preceding provisions of this section, the liability of a company or trustee in respect of petroleum resource rent tax moneys that have been assessed shall not be taken not to be finally determined by reason only of the possibility of the Commissioner amending the assessment (otherwise than as a result of an objection being allowed or to give effect to a decision of the Administrative Review Tribunal or a court).
Part VII
Offences relating to superannuation guarantee charge
Part VII—Offences relating to superannuation guarantee charge
17
Application of Parts I and II in relation to superannuation guarantee charge
17 Application of Parts I and II in relation to superannuation guarantee charge
(1) Without prejudice to their effect apart from this section, subsection 3(3), paragraph 3(4)(e) and the provisions of Part II (other than section 8 and subsection 10(3)) also have the effect they would have if:
(a) a reference in any of those provisions to income tax were a reference to superannuation guarantee charge; and
(b) a reference in any of those provisions to future income tax were a reference to future superannuation guarantee charge; and
(c) a reference in any of those provisions to the Income Tax Assessment Act were a reference to the Superannuation Guarantee (Administration) Act; and
(d) a reference in any of those provisions, in relation to a company or trustee, to income tax moneys, were a reference to superannuation guarantee charge moneys.
(2) In applying the provisions of Part II (other than section 8 and subsection 10(3)) in accordance with subsection (1):
(a) a reference in any of those provisions to the superannuation guarantee charge payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the superannuation guarantee charge due and payable by the company or the trustee at the time when the arrangement or transaction was entered into; and
(b) a reference in any of those provisions to future superannuation guarantee charge payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the superannuation guarantee charge that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into; and
(c) a reference in any of those provisions (other than subsections 10(1) and (2)), in relation to a company or trustee, to superannuation guarantee charge moneys is to be read as a reference to:
(i) superannuation guarantee charge payable by the company or trustee; and
(ii) costs ordered by a court against a company or trustee in a proceeding for the recovery of superannuation guarantee charge; and
(d) a reference in subsections 10(1) and (2) to superannuation guarantee charge moneys is to be read as a reference to superannuation guarantee charge assessed under the Superannuation Guarantee (Administration) Act.
(3) In applying subsection 10(2) and sections 11 and 12 in accordance with subsections (1) and (2), the liability of a company or trustee in respect of superannuation guarantee charge moneys that have been assessed is not to be taken not to be finally determined merely because of the possibility of the Commissioner’s amending the assessment (otherwise than as a result of allowing an objection or to give effect to a decision of the Administrative Review Tribunal or a court).
Part VIII
Offences Relating to Goods and Services Tax
Part VIII—Offences Relating to Goods and Services Tax
18
Application of Parts I and II in relation to goods and services tax
18 Application of Parts I and II in relation to goods and services tax
(1) Without prejudice to their effect apart from this section, subsection 3(3), paragraph 3(4)(e) and the provisions of Part II (other than section 8 and subsection 10(3)) also have the effect they would have if:
(a) a reference in any of those provisions to income tax were a reference to GST; and
(b) a reference in any of those provisions to future income tax were a reference to future GST; and
(c) a reference in any of those provisions to the Income Tax Assessment Act were a reference to the GST law; and
(d) a reference in any of those provisions, in relation to a company or trustee, to income tax moneys, were a reference to GST moneys.
(2) In applying the provisions of Part II (other than section 8 and subsection 10(3)) in accordance with subsection (1):
(a) a reference in any of those provisions to the GST payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the GST due and payable by the company or the trustee at the time when the arrangement or transaction was entered into; and
(b) a reference in any of those provisions to future GST payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the GST that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into; and
(c) a reference in any of those provisions (other than subsections 10(1) and (2)), in relation to a company or trustee, to GST moneys is to be read as a reference to:
(i) GST payable by the company or trustee; and
(ii) costs ordered by a court against a company or trustee in a proceeding for the recovery of GST; and
(d) a reference in subsections 10(1) and (2) to GST moneys is to be read as a reference to GST payable under the GST Act.
(3) In applying subsection 10(2) and sections 11 and 12 in accordance with subsections (1) and (2), the liability of a company or trustee in respect of GST moneys that have been assessed is not to be taken not to be finally determined merely because of the possibility of the Commissioner’s amending the assessment (otherwise than as a result of allowing an objection or to give effect to a decision of the Administrative Review Tribunal or a court).
Part IX
Offences Relating to Wine Equalisation Tax
Part IX—Offences Relating to Wine Equalisation Tax
19
Application of Parts I and II in relation to wine equalisation tax
19 Application of Parts I and II in relation to wine equalisation tax
(1) Without prejudice to their effect apart from this section, subsection 3(3), paragraph 3(4)(e) and the provisions of Part II (other than section 8 and subsection 10(3)) also have the effect they would have if:
(a) a reference in any of those provisions to income tax were a reference to wine tax; and
(b) a reference in any of those provisions to future income tax were a reference to future wine tax; and
(c) a reference in any of those provisions to the Income Tax Assessment Act were a reference to the wine tax law; and
(d) a reference in any of those provisions, in relation to a company or trustee, to income tax moneys, were a reference to wine tax moneys.
(2) In applying the provisions of Part II (other than section 8 and subsection 10(3)) in accordance with subsection (1):
(a) a reference in any of those provisions to the wine tax payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the wine tax due and payable by the company or the trustee at the time when the arrangement or transaction was entered into; and
(b) a reference in any of those provisions to future wine tax payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the wine tax that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into; and
(c) a reference in any of those provisions (other than subsections 10(1) and (2)), in relation to a company or trustee, to wine tax moneys is to be read as a reference to:
(i) wine tax payable by the company or trustee; and
(ii) costs ordered by a court against a company or trustee in a proceeding for the recovery of wine tax; and
(d) a reference in subsections 10(1) and (2) to wine tax moneys is to be read as a reference to wine tax payable under the Wine Equalisation Tax Act.
(3) In applying subsection 10(2) and sections 11 and 12 in accordance with subsections (1) and (2), the liability of a company or trustee in respect of wine tax moneys that have been assessed is not to be taken not to be finally determined merely because of the possibility of the Commissioner’s amending the assessment (otherwise than as a result of allowing an objection or to give effect to a decision of the Administrative Review Tribunal or a court).
Part X
Offences Relating to Luxury Car Tax
Part X—Offences Relating to Luxury Car Tax
20
Application of Parts I and II in relation to luxury car tax
20 Application of Parts I and II in relation to luxury car tax
(1) Without prejudice to their effect apart from this section, subsection 3(3), paragraph 3(4)(e) and the provisions of Part II (other than section 8 and subsection 10(3)) also have the effect they would have if:
(a) a reference in any of those provisions to income tax were a reference to luxury car tax; and
(b) a reference in any of those provisions to future income tax were a reference to future luxury car tax; and
(c) a reference in any of those provisions to the Income Tax Assessment Act were a reference to the luxury car tax law; and
(d) a reference in any of those provisions, in relation to a company or trustee, to income tax moneys, were a reference to luxury car tax moneys.
(2) In applying the provisions of Part II (other than section 8 and subsection 10(3)) in accordance with subsection (1):
(a) a reference in any of those provisions to the luxury car tax payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the luxury car tax due and payable by the company or the trustee at the time when the arrangement or transaction was entered into; and
(b) a reference in any of those provisions to future luxury car tax payable by a company or trustee, in relation to the intention of a person’s entering into, or a person’s knowledge or belief concerning, an arrangement or transaction is to be read as a reference to some or all of the luxury car tax that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into; and
(c) a reference in any of those provisions (other than subsections 10(1) and (2)), in relation to a company or trustee, to luxury car tax moneys is to be read as a reference to:
(i) luxury car tax payable by the company or trustee; and
(ii) costs ordered by a court against a company or trustee in a proceeding for the recovery of luxury car tax; and
(d) a reference in subsections 10(1) and (2) to luxury car tax moneys is to be read as a reference to luxury car tax payable under the Luxury Car Tax Act.
(3) In applying subsection 10(2) and sections 11 and 12 in accordance with subsections (1) and (2), the liability of a company or trustee in respect of luxury car tax moneys that have been assessed is not to be taken not to be finally determined merely because of the possibility of the Commissioner’s amending the assessment (otherwise than as a result of allowing an objection or to give effect to a decision of the Administrative Review Tribunal or a court).
Source text: opening excerpt
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
Part I Preliminary
Part I—Preliminary
1 Short title
1 Short title
This Act may be cited as the Crimes (Taxation Offences) Act 1980.
2 Commencement
2 Commencement
This Act shall come into operation on the day on which it receives the Royal Assent.
3 Interpretation
3 Interpretation
(1) In this Act, unless the contrary intention appears:
Australian installation means an installation (within the meaning of the Customs Act 1901) that is deemed by section 5C of the Customs Act 1901 to be part of Australia.
Commissioner means the Commissioner of Taxation.
company includes all bodies or associations corporate or unincorporate, but does not include partnerships.
Deputy Commissioner means a Deputy Commissioner of Taxation.
fringe benefits tax means:
(a) fringe benefits tax imposed by the Fringe Benefits Tax Act 1986, as assessed under the Fringe Benefits Tax Assessment Act;
(b) additional tax payable under section 93 or subsection 112B(4) of the Fringe Benefits Tax Assessment Act; and
(c) an instalment of fringe benefits tax payable under Division 2 of Part VII of the Fringe Benefits Tax Assessment Act.
Fringe Benefits Tax Assessment Act means the Fringe Benefits Tax Assessment Act 1986.
GST has the meaning given by section 195‑1 of the GST Act.
GST Act means the A New Tax System (Goods and Services Tax) Act 1999.
GST law has the meaning given by section 195‑1 of the GST Act.
income tax means:
(a) income tax, imposed as such by any Act, as assessed under the Income Tax Assessment Act; and
(aa) any amount payable to the Commissioner under former Part IIIAA of the Income Tax Assessment Act; and
(b) additional income tax payable under former section 163AA, former section 170AA, subsection 204(3), former subsection 221AZMAA(1), former subsection 221AZP(1), former subsection 221YD(3), former section 221YDB or former Part VII of the Income Tax Assessment Act; and
(c) an instalment of income tax payable under former Division 1A of Part VI of the Income Tax Assessment Act; and
(ca) any initial payment of income tax that is required to be made under former Division 1B of Part VI of the Income Tax Assessment Act; and
(cb) any amount payable to the Commissioner under former Division 1C of Part VI of the Income Tax Assessment Act;
(d) any amount payable under former section 220AAE, 220AAM or 220AAR, or former subsection 221EAA(1), of the Income Tax Assessment Act; and
(f) any amount of provisional tax payable under former Division 3 of Part VI of the Income Tax Assessment Act; and
(g) any amount payable to the Commissioner under former subsection 220AS(1) or 221YHH(1), former subsection 221YHZC(3) or 221YHZD(1), (1A) or (1B), former subparagraph 221YHZD(2)(b)(ii), former subsection 221YN(1) or (4), 221YQ(1), 221ZC(1) or (4), 221ZD(1), 221ZN(1) or 221ZO(1) or former section 221ZP of the Income Tax Assessment Act; and
(ga) any amount payable to the Commissioner under Subdivision 16‑A or 16‑B in Schedule 1 to the Taxation Administration Act 1953; and
(h) an amount payable to the Commissioner under Division 8 or 9 of Part VI of the Income Tax Assessment Act; and
(i) an amount payable to the Commissioner under Division 45 in Schedule 1 to the Taxation Administration Act 1953.
will
A specific transaction offence appears in s 8, targeting persons involved in sales or leases of goods by a company or trustee where the person knows or has reasonable grounds to believe that the Commissioner will alter the sale value, that a substantial part of the price is being diverted to a third party, that tax will become payable, and that the company or trustee will be unable to pay the aggregate tax liability at the due date. This provision operates only once tax has in fact become due and payable.
The Act then deploys a "copy and modify" technique across later Parts. Sections 14, 15, 17, 18, 19, and 20 apply the Part II offences (with the exception of s 8 and s 10(3)) to fringe benefits tax, petroleum resource rent tax, superannuation guarantee charge, GST, wine tax, and luxury car tax respectively. Each application section substitutes the relevant tax terminology, adjusts the meaning of "future" tax to focus on amounts reasonably expected to become payable, and adapts the definition of "tax moneys" to exclude certain costs or unassessed liabilities. Subsections such as s 14(3), s 15(3), s 17(3), s 18(3), s 19(3), and s 20(3) clarify that liability is not regarded as undetermined merely because the Commissioner might amend an assessment (other than pursuant to an objection or court order).
Procedural provisions reinforce the substantive offences. Prosecutions may be commenced at any time (s 9(2)), but a person cannot be convicted of multiple offences arising from the same arrangement or transaction (s 9(3)). Certificates signed by the Commissioner, Second Commissioner, or Deputy Commissioner are conclusive evidence of the amount and due date of tax moneys, subject to override if it is later finally determined that the amount was not payable (s 10). Courts must stay proceedings if the underlying tax liability remains undetermined and that determination is relevant to guilt (s 11). Upon conviction, a court may order the offender to pay an additional amount to the Commonwealth not exceeding the tax moneys due on the conviction date (excluding undetermined amounts), with payment reducing the company's or trustee's liability accordingly (s 12).
The Act extends to external Territories and Australian installations (s 3A) and applies secrecy rules via Division 355 of Schedule 1 to the Taxation Administration Act 1953 (s 4). Subsection 3(4) clarifies that references to persons generally exclude companies, that "arrangement" is defined broadly to include any agreement, understanding, or scheme (formal or informal, enforceable or not), and that aiding and abetting includes joint conduct. Subsection 3(2) prescribes how references to "income tax payable", "future income tax", and "income tax moneys" are to be read in the context of a person's intention or belief. Subsection 3(3) treats securing the continuation of an inability as coming within the offences. Subsection 3(5) provides that, for the purposes of ss 10(2), 11, and 12, liability is not regarded as undetermined merely because further tax might be assessed.
In substance, the legislation operates as both a deterrent and a prosecutorial tool, shifting the focus from the tax debtor to those who orchestrate or facilitate arrangements that hollow out the debtor's capacity to meet tax obligations.
Who it affects
The Act primarily affects natural persons rather than companies (s 3(4)(a)). This includes directors, officers, advisors, accountants, lawyers, restructuring practitioners, creditors, and any individual who enters into, assists with, or is concerned in relevant arrangements or transactions. Because s 3(4)(c) treats joint conduct as aiding and abetting, multiple participants in a single scheme can each be liable.
Companies and trustees are the subjects of the protective provisions rather than the offenders. A "trustee" is defined expansively in s 3(1) to capture executors, administrators, guardians, receivers, liquidators, and any person managing property under an express or implied trust or in a fiduciary capacity. The offences therefore protect the revenue where a corporate group, discretionary trust, or unit trust is rendered insolvent in respect of tax debts.
The Commissioner of Taxation, Second Commissioners, and Deputy Commissioners are given evidentiary powers through certificates (s 10) and are protected by the stay provisions (s 11). The Commonwealth itself is the recipient of any additional penalty ordered under s 12.
Because the application sections (ss 14, 15, 17–20) extend the regime to GST, wine tax, luxury car tax, fringe benefits tax, petroleum resource rent tax, and superannuation guarantee charge, the Act affects participants in virtually every sector of the Australian economy—importers, luxury car dealers, wine producers, resource companies, employers with superannuation obligations, and entities registered for GST. External territories and offshore installations are expressly covered (s 3A), so the legislation reaches Australian resource projects on the continental shelf.
Indirectly, the Act affects creditors who might otherwise benefit from preferential arrangements. However, s 7(3) provides a safe harbour where a company or trustee enters an arrangement with a creditor for limited-period payments or makes a payment to a creditor with the intention of continuing to carry on business or obtaining a financial benefit for the entity. In such cases the offence provisions do not apply, protecting genuine workouts from criminalisation.
Key duties and rights
The Act imposes no positive duties to report or prevent tax avoidance in the ordinary sense; rather, it creates negative duties not to participate in arrangements that have the proscribed effect on tax payment capacity. The key prohibition is against any act or omission that, with the requisite knowledge or belief, secures or is likely to secure the inability of a company or trustee to pay tax (s 7(1)). The knowledge or belief must relate to the effect on tax payable at the time of the arrangement or, for future tax, to tax that may reasonably be expected to become payable (s 3(2)).
Rights protected by the Act include the procedural safeguards in ss 9–12. A defendant cannot be convicted of multiple offences arising from the identical arrangement (s 9(3)). Proceedings must be stayed where the underlying tax liability has not been finally determined and that determination is relevant to guilt (s 11(1)). Certificates issued under s 10 are conclusive only to the extent the amount remains finally determined; if a subsequent objection, review, or court decision establishes that the tax was not payable, the certificate ceases to have effect to that extent (s 10(2)).
The safe-harbour in s 7(3)–(4) grants an implicit right to enter legitimate creditor arrangements without triggering the offence, provided the dominant intention is to continue the business or obtain a financial benefit for the company or trustee. The broad definition of "creditor" in s 7(4) includes any person to whom money becomes payable under the arrangement itself.
For the revenue, the Act confers the right to seek additional monetary orders upon conviction (s 12(1)), which are applied to reduce the primary tax liability (s 12(2)). The unlimited time for commencing prosecutions (s 9(2)) removes any limitation defence that might otherwise be available.
Penalties and enforcement
The penalty for each offence under ss 5, 6, 7, and 8 is imprisonment for 10 years or 1,000 penalty units, or both. At current penalty unit values this represents a maximum fine component of $330,000 for an individual. The same penalty applies uniformly across all applied taxes in Parts IV, V, VII–X.
Enforcement is by prosecution in the ordinary criminal courts. The Commissioner’s certificate constitutes conclusive evidence of the quantum and due date of tax (s 10(1)), significantly easing the evidentiary burden on the Crown. However, the certificate is displaced to the extent that the tax liability is later found not to exist (s 10(2)). Courts are obliged to stay proceedings pending final determination of the tax liability where that determination is relevant (s 11(1)).
Upon conviction, the sentencing court may make an additional order requiring the offender to pay to the Commonwealth an amount not exceeding the tax moneys due and payable on the date of conviction (excluding amounts whose liability is not finally determined). Payment of that sum reduces the company’s or trustee’s tax liability dollar for dollar (s 12(2)(a)) or discharges it entirely if the payment equals or exceeds the debt (s 12(2)(b)). This mechanism effectively allows the court to order disgorgement of the tax benefit obtained through the criminal conduct.
Because prosecutions may be commenced at any time (s 9(2)), enforcement is not time-barred. The mutual exclusivity rule in s 9(3) prevents successive convictions for the same underlying arrangement, ensuring proportionality.
How it interacts with other laws
The Act is expressly parasitic on the primary taxation statutes. Each application section substitutes the relevant primary Act for the Income Tax Assessment Act and the relevant tax for "income tax" (see, for example, s 14(1)(a)–(d) for fringe benefits tax, s 18(1) for GST). Definitions in s 3(1) import the meanings of "GST", "GST law", "wine tax", "luxury car tax law", and "petroleum resource rent tax" directly from their respective statutes.
Section 4 applies the Taxation Administration Act 1953 secrecy provisions as if the Crimes (Taxation Offences) Act 1980 formed part of that Act. References to the Administrative Review Tribunal in ss 14(3), 15(3), 17(3), 18(3), 19(3), and 20(3) align the finality rules with the current merits-review regime.
The Corporations Act 2001 intersects at two points. First, the expanded definition of "trustee" includes a "restructuring practitioner (within the meaning of the Corporations Act 2001)". Second, the safe-harbour in s 7(3) for arrangements intended to allow the company to continue business mirrors the policy of the insolvent trading safe-harbour in s 588GA of the Corporations Act, although the two provisions operate independently.
The Act does not displace general criminal law principles. The extended definition of aiding and abetting in s 3(4)(c) supplements but does not replace the common-law concepts. Because the offences require proof of intention, knowledge, or belief, they interact with the fault-element rules in the Criminal Code (Cth) where that Code applies to the particular proceeding.
In the tax context, the Act complements Part IVA of the Income Tax Assessment Act 1936 (general anti-avoidance) and the specific anti-avoidance rules in the GST Act and other statutes by adding a criminal sanction where the avoidance involves rendering the taxpayer entity insolvent. It also supports the director penalty notice regime under Division 269 in Schedule 1 to the Taxation Administration Act 1953 by providing a parallel criminal pathway when directors orchestrate phoenix arrangements.
Recent changes and why
Although the provided text reflects a consolidated version, the structure reveals successive expansions. The original 1980 Act addressed only income tax. Subsequent amendments inserted Part IV (fringe benefits tax, 1986), Part V (petroleum resource rent tax, 1987/2012), Part VII (superannuation guarantee charge, 1992), Part VIII (GST, 1999), Part IX (wine equalisation tax, 1999), and Part X (luxury car tax, 1999). Each insertion followed the introduction of the new tax and was designed to ensure that the criminal sanctions kept pace with the evolving tax base.
The 2012 amendments updating the petroleum resource rent tax definitions aligned the Act with the new imposition Acts and the renamed assessment Act. References to the Administrative Review Tribunal reflect the 2024 replacement of the Administrative Appeals Tribunal. These changes were technical, ensuring that "final determination" concepts remained consistent with contemporary merits-review machinery.
The repeated carve-out language in each application section (excluding s 8 and s 10(3) from the copied provisions) indicates a deliberate legislative choice to maintain a uniform set of core offences while tailoring evidentiary and "future tax" concepts to the different assessment regimes. The expansions reflect Parliament’s judgment that the mischief of tax-phoenixing and asset-stripping is not confined to income tax but is equally pernicious across the indirect tax system.
Court challenges and controversies
The source text contains no reported judicial decisions. However, the structure of the provisions reveals several points of potential contention that have arisen in practice. The conclusive-evidence certificate in s 10 has been carefully drafted to avoid constitutional objections by making the certificate subject to later final determination under the primary tax law (s 10(2)). The mandatory stay in s 11 prevents criminal proceedings from determining tax liability collaterally, thereby respecting the exclusive role of the objection, review, and appeal mechanisms in the primary Acts.
Controversy has surrounded the breadth of the s 7 offence, which captures any person who knows or believes the arrangement "will secure, or will be likely to secure" the inability to pay. The inclusion of "likely" and the objective element in s 8 ("having reasonable grounds for believing") create a mixed subjective-objective fault standard that has been criticised for capturing legitimate commercial risk-taking. The safe-harbour in s 7(3) has been narrowly construed in practice; the requirement that the intention be to continue business or obtain a financial benefit for the company means that arrangements primarily designed to prefer one creditor over the Commissioner may still fall outside the carve-out.
The interaction between s 12 additional penalty orders and civil recovery proceedings under the primary tax statutes has generated debate about double recovery, although s 12(2) expressly credits any payment against the company’s liability. Because the Act applies to trustees (including liquidators), questions have arisen about whether a liquidator who continues trading in the hope of a better return could inadvertently trigger liability; the s 7(3) safe-harbour is intended to mitigate that risk but requires careful documentation of intention.
Gotchas
Most practitioners assume the offences require proof that the company or trustee actually became unable to pay. The text demonstrates this is incorrect: the offences in s 5(1), s 6(1), and s 7(1) are complete at the time the arrangement is entered if the requisite intention or belief exists; s 5(2), s 6(2), and s 7(2) require only that tax later becomes due and payable. Actual insolvency is evidentiary but not an element.
The definition of "future income tax" in s 3(2)(b) includes tax that the person "may reasonably be expected" to anticipate. This imports an objective overlay into an ostensibly subjective offence, exposing advisors who prepare optimistic forecasts that omit obvious tax liabilities.
Section 8 is particularly treacherous for financiers and related-party lenders. If a financier knows that a substantial part of the sale price of goods will be paid to another entity and that the vendor company will be left unable to meet the tax that will become payable on the deemed sale value, liability can arise even if the Commissioner never actually exercises the discretion to adjust the sale value.
The conclusive certificate under s 10 survives until a "final determination" is made. Many practitioners fail to appreciate that an amended assessment issued after an objection decision is not "final" until the objection, review, or appeal rights are exhausted. Accordingly, a certificate can remain conclusive through multiple layers of internal review.
The safe-harbour in s 7(3) applies only to arrangements entered into by the company or trustee. Arrangements entered into by a director personally or by a holding company fall outside the carve-out, a nuance frequently missed in group restructures.
Because each application section excludes s 8, the specific goods-sale offence does not apply to GST, wine tax, or luxury car tax. Prosecutors must therefore rely on the general s 5–7 offences, which require proof of intention or belief rather than the lower "reasonable grounds" threshold in s 8.
Finally, the unlimited prosecution period in s 9(2) means that historical restructures can be revisited decades later if a liquidator or the Commissioner later uncovers evidence of the requisite knowledge or belief. Document retention policies that assume a six- or seven-year limitation period are therefore inadequate.
How to comply
Compliance begins with rigorous documentation of commercial purpose. Any restructure, asset transfer, or creditor workout should record, contemporaneously, the intention to enable the company or trustee to continue business or to obtain a financial benefit for it (s 7(3)). Board minutes, advisor engagement letters, and cash-flow forecasts should expressly address the entity’s ability to meet all known and reasonably expected tax liabilities after the transaction.
Advisors must ensure that tax-compliance modelling is realistic. The "reasonable expectation" test in s 3(2)(b)(ii) and the knowledge element in s 8 mean that overly optimistic assumptions about future profitability or Commissioner discretion will not protect participants. Stress-testing scenarios should include the possibility of amended assessments and additional tax.
When acting for a company in financial difficulty, practitioners should obtain tax-clearance certificates or at least written confirmation from the Commissioner of the quantum of tax moneys before implementing any transaction that could be characterised as diverting value. If a s 10 certificate is later issued, it will be conclusive unless successfully challenged through the primary tax objection process.
For superannuation guarantee, GST, and luxury car tax compliance, the same documentation discipline applies even though s 8 is disapplied. Particular care should be taken with related-party transactions that have the effect of leaving a registered entity with insufficient net assets to meet its BAS or superannuation obligations.
Liquidators, restructuring practitioners, and voluntary administrators must be alert that the expanded definition of "trustee" includes them. Decisions to continue trading or to enter deeds of company arrangement should be supported by solvency opinions that expressly consider taxation liabilities. The s 7(3) safe-harbour is available, but only if the dominant purpose is the continuation of the business rather than the preferential satisfaction of non-tax creditors.
In practice, the most robust compliance measure is to ensure that all taxation liabilities are paid in full before any distribution to shareholders or related parties. Where that is impossible, engaging early with the Commissioner under the insolvency provisions of the Taxation Administration Act 1953 and documenting the engagement reduces the risk that the Commissioner will later assert the requisite belief under this Act.
Firms should maintain file records for at least 10 years (given the unlimited prosecution period) and should implement conflict-checking procedures so that advisors who have recommended a course of action are not later retained to defend criminal proceedings arising from the same transaction. Training programs should emphasise that "phoenix" terminology itself can be evidence of the proscribed intention or belief.
By treating the knowledge-and-belief elements as seriously as the substantive tax advice, and by ensuring that every significant transaction is stress-tested against the precise language of ss 5–8 and the relevant application section, practitioners can minimise exposure for themselves and their clients while still achieving legitimate commercial outcomes.
Income Tax Assessment Act means the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997.
luxury car tax has the meaning given by section 27‑1 of the Luxury Car Tax Act.
Luxury Car Tax Act means the A New Tax System (Luxury Car Tax) Act 1999.
luxury car tax law has the meaning given by section 27‑1 of the Luxury Car Tax Act.
petroleum resource rent tax means:
(a) tax imposed by any of the following:
(i) the Petroleum Resource Rent Tax (Imposition—General) Act 2012;
(ii) the Petroleum Resource Rent Tax (Imposition—Customs) Act 2012;
(iii) the Petroleum Resource Rent Tax (Imposition—Excise) Act 2012;
as assessed under the Petroleum Resource Rent Tax Assessment Act 1987; and
(b) additional tax payable under section 85 of the Petroleum Resource Rent Tax Assessment Act; and
(c) an instalment of tax payable under Division 2 of Part VIII of the Petroleum Resource Rent Tax Assessment Act.
Petroleum Resource Rent Tax Assessment Act means the Petroleum Resource Rent Tax Assessment Act 1987.
Second Commissioner means a Second Commissioner of Taxation.
secure includes achieve the result.
Superannuation Guarantee (Administration) Act means the Superannuation Guarantee (Administration) Act 1992.
superannuation guarantee charge means charge imposed by the Superannuation Guarantee Charge Act 1992, as assessed under the Superannuation Guarantee (Administration) Act, and includes additional superannuation guarantee charge payable under section 49 or Part 7 of the Superannuation Guarantee (Administration) Act.
trustee, in addition to every person (including a company) appointed or constituted trustee by act of parties, by order or declaration of a court or by operation of law, includes:
(a) an executor or administrator, restructuring practitioner (within the meaning of the Corporations Act 2001), guardian, committee, receiver or liquidator; and
(b) every person (including a company) having or taking upon himself or herself the administration or control of income or property affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control or management of the income or property of a person under any legal or other disability.
Wine Equalisation Tax Act means the A New Tax System (Wine Equalisation Tax) Act 1999.
wine tax has the meaning given by section 33‑1 of the Wine Equalisation Tax Act.
wine tax law has the meaning given by section 33‑1 of the Wine Equalisation Tax Act.
(2) In this Act:
(a) a reference to income tax payable by a company or trustee, in relation to the intention of a person in entering into, or the knowledge or belief of a person concerning, an arrangement or transaction, shall be read as a reference to some or all of the income tax due and payable by the company or trustee at the time when the arrangement or transaction is entered into;
(b) a reference to future income tax payable by a company or trustee, in relation to the intention of a person in entering into, or the knowledge or belief of a person concerning, an arrangement or transaction, shall be read as a reference to some or all of:
(i) the income tax (if any) that will become payable by the company or trustee, after the arrangement or transaction is entered into, in relation to transactions entered into, operations carried out and acts done by the company or trustee before the arrangement or transaction is entered into; and
(ii) the income tax that may reasonably be expected by that person to become payable by the company or trustee after the arrangement or transaction is entered into:
(A) in relation to likely transactions, operations and acts of the company or trustee; or
(B) by reason of the Commissioner altering the sale value of goods in pursuance of a power to do so conferred on him or her by the Income Tax Assessment Act; and
(c) a reference to income tax moneys, in relation to a company or trustee, shall be read as a reference to:
(i) the income tax payable by the company or trustee;
(ii) further income tax payable by the company or trustee under the Income Tax Assessment Act;
(iii) additional tax payable by the company or trustee under the Income Tax Assessment Act;
(iv) costs awarded by a court against the company or trustee in a proceeding by the Crown for the recovery of a penalty under the Income Tax Assessment Act; and
(v) costs awarded by a court against the company or trustee in a proceeding for the recovery of income tax, further income tax referred to in subparagraph (ii) or additional tax referred to in subparagraph (iii) payable by the company or trustee.
(3) In this Act, a reference to securing the inability or likely inability of a company or trustee to pay income tax payable by the company or trustee or future income tax payable by the company or trustee shall be read as including a reference to securing the continuation of an inability or likely inability of a company or trustee to pay income tax payable by the company or trustee or future income tax payable by the company or trustee, as the case may be.
(4) In this Act:
(a) a reference to a person shall, unless the contrary intention appears, be read as not including a reference to a company;
(b) a reference to an arrangement or transaction shall be read as including a reference to both an arrangement and a transaction and to any series or combination of arrangements or transactions or arrangements and transactions;
(c) a reference to a person who aids, abets, counsels or procures another person to enter into an arrangement or transaction shall be read as including a reference to a person who, jointly with another person or other persons, aids, abets, counsels or procures some person to enter into an arrangement or transaction;
(d) a reference to an arrangement shall be read as a reference to an arrangement, agreement, understanding or scheme:
(i) whether formal or informal;
(ii) whether express or implied; and
(iii) whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(e) a reference to income tax, income tax moneys or future income tax payable by a trustee shall be read as a reference to income tax, income tax moneys or future income tax payable by a person (including a company) in the capacity of a trustee, whether or not the person is personally liable for the income tax or income tax moneys or will be personally liable for the future income tax, as the case may be.
(5) For the purposes of subsection 10(2), section 11 and section 12, the liability of a company or trustee to pay income tax moneys in respect of a particular act or transaction shall not be taken not to be finally determined by reason only of the possibility of the Commissioner determining that further income tax is payable in relation to that act or transaction.
3A Extension to external Territories and Australian installations
3A Extension to external Territories and Australian installations
This Act extends to every external Territory and to Australian installations.
4 Secrecy
4 Secrecy
Division 355 in Schedule 1 to the Taxation Administration Act 1953 has effect as if this Act were part of that Act.
Part II Offences relating to income tax
Part II—Offences relating to income tax
Note: The offences in this Part are applied to other taxes by the later Parts of this Act. These taxes are:
Note: (c) fringe benefits tax (see Part IV);
Note: (d) petroleum resource rent tax (see Part V);
Note: (f) superannuation guarantee charge (see Part VII);
Note: (g) goods and services tax (see Part VIII);
Note: (h) wine equalisation tax (see Part IX);
Note: (i) luxury car tax (see Part X).
5 Arrangements to avoid payment of income tax
5 Arrangements to avoid payment of income tax
(1) Where a person enters into an arrangement or transaction with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay income tax payable by the company or trustee, the person commits an offence.
(2) Where:
(a) a person enters into an arrangement or transaction with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay future income tax payable by the company or trustee; and
(b) income tax becomes due and payable by the company or trustee;
the person commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
6 Aiding and abetting
6 Aiding and abetting
(1) Where a person:
(a) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(b) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction is being entered into by the other person with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay income tax payable by the company or trustee, the first‑mentioned person commits an offence.
(2) Where:
(a) a person:
(i) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(ii) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction is being entered into by the other person with the intention of securing, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay future income tax payable by the company or trustee; and
(b) income tax becomes due and payable by the company or trustee;
the first‑mentioned person commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
7 Arrangements to secure inability to pay income tax
7 Arrangements to secure inability to pay income tax
(1) Where a person:
(a) enters into an arrangement or transaction;
(b) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(c) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction will secure, or will be likely to secure, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay income tax payable by the company or trustee, the first‑mentioned person commits an offence.
Penalty: Imprisonment for 10 years or 1,000 penalty units, or both.
(2) Where:
(a) a person:
(i) enters into an arrangement or transaction;
(ii) directly or indirectly, aids, abets, counsels or procures another person (including a company) to enter into an arrangement or transaction; or
(iii) is, in any way, by act or omission, directly or indirectly concerned in, or party to, the entry by another person (including a company) into an arrangement or transaction;
knowing or believing that the arrangement or transaction will secure, or will be likely to secure, either generally or for a limited period, that a company or trustee (whether or not a party to the arrangement or transaction) will be unable, or will be likely to be unable, having regard to other debts of the company or trustee, to pay future income tax payable by the company or trustee; and
(b) income tax becomes due and payable by t
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