We can ask the ATO to withhold or garnishee some or all of your tax refund. The program aims to help you pay your Centrelink debt. To do this the ATO advises us when there is: an entitlement to a tax refund.
We pass approximately 100,000 records to Centrelink each week. Around 12% of these are found to be Centrelink clients. ATO data is provided under table item 1 in table 1 in section 355-65 of Schedule 1 to the Taxation Administration Act 1953 (TAA).
You need to tell us if you or your partner don't need to lodge a tax return. If you have a myGov account that's linked to Centrelink, you can sign in to do this and confirm your income for 2021-22. If you don't have this set up, you'll need to use either your: Centrelink online account through myGov.
Centrelink do not normally tell you if they are investigating you. The initial phases of their investigation will be discreetly conducted by cross checking your financial information from your bank, ATO and even employer.
If offsetting your refund will cause you serious financial hardship, you can contact us as we may be able to pay the refund to you instead. You can find information about apply for financial hardship here.
You can request a Statement of Debt for any 5 year period going back to 1998. You can make more than one request.
Lodging inaccurate or dishonest tax returns or business activity statements with the Australian Taxation Office is a criminal offence warranting serious penalties ranging from 1 to 10 years imprisonment and heavy fines. These are also considered a type of white collar crime.
If Centrelink suspect that you are claiming more social security benefits than you are entitled to they will investigate your situation. Centrelink may believe that you have not been honest with them because of routine data matching checks or due to getting a tip-off from a member of the public.
If you have defrauded Centrelink, you may be charged under section 134.2 – obtaining a financial advantage by deception. If you are found guilty, the maximum penalty is 10 years imprisonment. You may instead, or also, receive a fine between $10,000 and $100,000 and be made to repay the benefit to Centrelink.
Centrelink has the power at this point to request details of your accounts from your bank. This information will be sent in an encrypted form to specialised staff, who will review them.
Will I get prosecuted if I don't lodge a tax return? Even though it's not common, the ATO can and does prosecute for failing to lodge tax returns. The maximum penalty which can be applied on prosecution is now $9,000 or imprisonment for up to 12 months.
If you don't report and you're meant to, we won't pay you. You can report online up to 13 days after your reporting date. If you're more than 13 days late, you need to call us on your regular payment line.
1 You must declare all gross employment income paid in the last 14 days up to and including your reporting day. 2 You must declare your gross employment income. This is the amount paid before tax and other deductions. This can be found on your payslip.
For your Special Benefit claim you must provide bank statements for the last 3 months for all accounts you have. This includes any overseas accounts. If you have a partner, we'll also require bank statements for all accounts held by them. You'll also need to confirm your identity and provide a tax file number.
We assess your and your partner's income from all sources. This includes financial assets such as superannuation. To work out how much income your financial assets produce, we use deeming. Pensions have income and asset limits.
The ATO can, and will, check your bank accounts, cross reference payments against an ABN and confirm missing income from your tax return.
We may select you at random to review your payment details. We may review your and your partner's details if you get one of the following payments: ABSTUDY. Age Pension.
Centrelink fraud is estimated to cost the Australian government approximately $3.5 billion dollars each year, in fraud, non-compliance or misreporting to the welfare system.
You and your partner must have no more than $5,000 in combined readily available funds. This includes any liquid assets you can sell. Liquid assets include cash you have on hand, money you have in the bank and financial investments you have. They also include gifts and other money available to you at short notice.
The reason for this is to do with what has been included or excluded in your tax return; for example, attempting to reduce taxes by not correctly including income or incorrectly overclaiming deductions can trigger an ATO Audit.
The ATO shares information with a range of government partners when responding to fraud, including law enforcement agencies. If you engage in tax fraud, you will be caught, and the best case is that you will need to repay amounts fraudulently obtained in full. The worst case is that you will go to jail.
You could face civil penalties.
Bigger understatements mean bigger consequences. In this case, the most common penalties are: Negligence penalty: 20% of the additional tax. Fraud penalty: 75% of the additional tax due to fraud.
Failing to file a tax return can be classified as a federal crime punishable as a misdemeanor or a felony. Willful failure to file a tax return is a misdemeanor pursuant to IRC 7203. In cases where an overt act of evasion occurred, willful failure to file may be elevated to a felony under IRC 7201.