A former tax agent and his client are facing substantial jail terms after a court found that the pair engaged in tax rorts, including refund fraud and tax avoidance.

The ATO estimated that the pair dishonestly gained a financial advantage worth over $4 million after investigating the client’s companies and personal income tax affairs.

False invoices

The ATO alleged that a 2015 audit revealed that the pair falsified business activity statements to fraudulently claim refunds. It also alleged that they operated a false invoice scheme to defraud the Commonwealth.

An additional audit of the client’s personal income tax affair revealed that the pair had under-reported the client’s income to avoid tax, the ATO said.

The ATO said that the pair’s activities contravened the Commonwealth criminal code.

Jail terms

The court sentenced the tax agent from Melbourne to five years and six months in prison with a non-parole period of two years and nine months. The court served his client, a Townsville man, with the same sentence with a non-parole period of two years and six months.

ATO assistant commissioner Jade Hawkins welcomed the decision.

“Schemes such as this undermine the integrity of the tax profession and give businesses an illegal and unfair advantage over those in the community who are doing the right thing,” Ms Hawkins said.