Queensland entrepreneurs jailed for tax fraud as part of ATO crackdown

Two Queensland businessmen have been jailed for over six years as part of the Australian Taxation Office’s project Wickenby – a crackdown on tax havens used by the wealthy.

The program has already managed to raise $230 million in tax liabilities during 2008-09 and managed to recover $40 million in cash.

Adam Hargraves and Daniel Stoten were sentenced in the Queensland Supreme Court yesterday to 6.5 years in jail each, with eligibility for parole after three years and nine months.

The pair were involved in a company which produced and distributed telephone directories. Both were found guilty on counts of conspiracy to dishonestly cause a loss to the Commonwealth between 2001-2005.

The men made an arrangement with Swiss accountancy firm Strachans in 1999, in an attempt to create a web of companies overseas and trusts to inflate certain expenses. Money was placed in overseas bank accounts to escape taxation.

Judge George Fryberg found the total amount of tax that would have been paid, if the conspiracy had not gone ahead, would have been around $2.2 million.

The case comes as the ATO’s voluntary disclosure program is set to end on June 30. The office has said that for eligible taxpayers who make a named offshore voluntary disclosure, they may not have to pay the full penalty.

“There’s a much higher price to be paid later if we discover undeclared income through an audit process. Penalties can be as high as 90%, and we will seek criminal prosecutions in serious cases,” tax commissioner Michael D’Asecnzo said in a statement last week.