WA businesswoman jailed for understating cash sales, underpaying GST

A Western Australian businesswoman has been sentenced to three years jail for understating cash businesses by more than $5.6 million and underpaying GST obligations by $514,000 for the two companies she was sole director of.

Joanne De Hollander was given a non-parole period of 20 months yesterday.

After the ruling, Tax Commission Michael D’Ascenzo said the lesson was clear for SMEs.

“If you do the wrong thing, you will be caught. Not declaring cash income and making fraudulent GST claims is illegal,” D’Ascenzo said.

“Doing the wrong thing towards your obligations insults those in the community including other businesses who do the right thing; and that is just not fair.”

Gavan Ord, business policy adviser CPA Australia, says the case is an example of what could happen if people try to avoid their obligations.

Ord says while the penalty might appear harsh in some people’s mind, in the end, De Hollander was “stealing money from the Government and all taxpayers” so it appears an appropriate sentence.

“That $5 million would have to be collected by legitimate taxpayers and she would have had a commercial advantage against competitors, so it’s all about a level playing field,” Ord says.

He warns that the ATO is keeping a close eye on GST compliance.

“They’ve got benchmarks for certain industries and if you start falling behind those benchmarks, they’ll send a letter asking why.”

He advises SMEs falling under the benchmarks to make sure they have a “justifiable position that can stand up to external scrutiny.”

“The ATO is on the case, so be careful.”

In its targets for the 2012 financial year, the Australian Taxation Office said 300 audits and reviews will look at serious and significant non-compliance.

It said: “Where appropriate, we will refer for prosecution businesses that:

• purposefully do not register to participate in the GST system;
• intentionally do not report, or under-report, their GST and other tax obligations;
• collude with others to evade or avoid GST and other tax obligations; and
• intentionally do not pay their GST or other tax obligations, including through engaging in phoenix behaviour or offshore arrangements.”

The ATO also said it was “working closely with other agencies, including Australian Customs and Border Protection Services and state revenue authorities, to share information indicating serious non-compliance.”