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Penalties for false rebate claims

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The Government is to bring before Parliament amendments to the income tax law that will expose taxpayers who make false claims for spouse and other rebates to the same additional tax ("penalty"

to which taxpayers who omit assessable income from returns or

make false claims for deduction of expenditure are exposed.

Under the present law a taxpayer who seeks to evade tax by

omitting assessable income from his or her return or who claims

a deduction or rebate for an amount of expenditure that is in excess of the expenditure actually incurred may be penalised in

one of two ways. The taxpayer may be prosecuted before the courts for the false repurn or, if prosecution action is not taken, is liable to statutory additional tax of 200 per cent of

the tax sought to be evaded. The Commissioner of Taxation has power to remit this additional tax in whole or in part and in the ordinary run of cases the Commissioner does exercise his

power of remission. .

By contrast, a taxpayer who makes a false claim for a rebate for

a spouse or other dependant may be subjected only to prosecution action. An unfortunately all-too-common way in which false

claims for rebate for a spouse are made is for the taxpayer

concerned to state in his or her return that his or her spouse

has little or no income when, in fact, the spouse does have a

substantial separate income. The Taxation Office has a facility,

through its computer system, to check returns of husband and

wife against each other in order to detect such false claims and

it has, in this way, discovered substantial numbers of them.

2 .

Prosecution action taken by the Commissioner of Taxation in a number of these cases has resulted in the imposition by the courts of fines and penalties, and these have been very

substantial in some of the cases. The Government considers that, instead of prosecution action being the only remedy open

to deal with this form of tax delinquency, there should be the same alternative as is available under the present law in relation to omission of income from.returns and false claims for deductions. .

Accordingly, the Government will, in the Budget sittings, be

bringing before Parliament legislation that will extend the

existing additional tax provisions to taxpayers who, after

today, lodge a return in which is claimed a rebate on the basis

of information that is false in one or more particular. The

rebates that will be covered by this amendment are those for a

spouse, daughter/housekeeper, housekeeper, parent or parent- in-law or invalid relative or as a sole parent, as well as the

zone rebate and the related rebate for members of the defence force.

CANBERRA 20 July 1979