ATO and Police Conduct Joint Raid Operation as Part of an International Crackdown on Suspected Use of Tax-Avoiding Tools

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As part of a global crackdown on using software to avoid paying taxes, the Australian Taxation Office and police recently conducted a joint operation that raided 35 businesses across the country.

According to the ATO, firms suspected of distributing and deploying illegal electronic sales suppression tools (ESST) across Victoria, New South Wales, Queensland, Western Australia, and Tasmania were the focus of the searches, which were carried out with the assistance of the Australian Federal Police.

Sales-suppression software works by replacing accurate transaction data with altered information in an attempt to avoid detection from tax authorities and police.

Since October 2018, it has been unlawful to create, provide, own, use, or advertise ESS tools or software in Australia, according to ATO deputy commissioner John Ford.

“These dodgy sales suppression tools allow retailers to keep a separate set of books and launder the money in one transaction,” Ford said. “They conceal and transfer this income anonymously, sometimes offshore.”

The ATO claimed that as part of an investigation into the use of tax evasion technologies, its officers closely collaborated with counterparts in His Majesty’s Revenue and Customs (HMRC) in the UK and the Internal Revenue Service (IRS) in the US.

According to Ford, an ESST-enabled point-of-sale system may produce false records by permanently deleting transactions, reordering transactions, reducing sales values, and misrepresenting transactions.

“So what might happen is that the customer orders a $60 steak and a $100 bottle of wine, and the ESS tool then puts it through the point-of-sale system as a $10 bowl of chips and a $4 bottle of soft drink,” he said.

“Adding ESST to your point-of-sale system is a deliberate and underhanded act designed to under-report income and avoid tax obligations. It’s illegal, and Australia will not tolerate it. Businesses using or promoting this technology are stealing effectively from the Australian community, which is not on.”

This is yet another example of how important it is for business owners to ensure that their records are accurate and compliant with tax laws. 

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