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A co-conspirator in a large-scale scheme to defraud the Commonwealth, by claiming false depreciation deductions in tax returns, has been sentenced to an aggregate term of 11 years in prison.

The offender was described as a highly experienced tax and finance professional. He and his co-conspirator were directors of a company (NHA). Over a period of some years, they caused NHA to make false depreciation claims in its tax returns of many hundreds of millions of dollars. The depreciation claims were in respect of the alleged cost of acquisition by NHA of certain medical technologies, even though no such cost was to be incurred. This was done to enable NHA to avoid incurring tax liabilities on income it was deemed to have received as the owner of units in a number of trusts. These trusts generated very large taxable profits from their participation in certain financing transactions that were arranged between the offender, the ANZ and some of its clients.

The offender and his co-conspirator agreed to deal with the “proceeds of crime” being the amounts standing in various bank accounts that represented the cash distributions from the trusts to NHA. These funds were the “proceeds of crime” because they were derived from the conspiracy. This was so because, to the knowledge of the offender and his co-conspirator, the funds would not be required to meet NHA’s tax liabilities as they would be eliminated by false depreciation deductions and the funds would not be required to make payments on the agreements the subject of the claims for depreciation as no genuine obligation to make those payments would be incurred. The offender and his co-conspirator agreed to cause the funds to be distributed offshore to various accounts controlled by entities associated with the offender and then repatriated to Australia, largely for their own enrichment.

At trial, the jury found the offender guilty of an offence under s 135.4(5) of the Criminal Code Act 1995 (Cth) of conspiring to dishonestly cause a loss or a risk of loss to the Commonwealth. He was also found guilty of an offence under s 11.5(1) and s 400.3(1) of the Code of conspiring to deal with property of a value of $1 million or more believing it to be the proceeds of crime.

Given that the false deductions had now been reversed by amended assessments and the Commonwealth now had a tax debt in its favour that it was entitled to at an earlier time, the court assessed the loss to the Commonwealth caused by the first offence to be a temporary loss to the Commonwealth of a tax debt of in excess of $100m.

The court sentenced the offender to an aggregate sentence of 11 years imprisonment on the two counts on which he was found guilty. Having regard to its size, scale, timespan and tactics his offending fell into the worst category of cases.

In passing sentence, the court said:

“One can have sympathy for the position of the offender. He finds himself broke, professionally ruined and incarcerated. He was a person who had much to lose and he has now lost it. The consequences for him and his family are severe. However his situation is not a product of circumstances but of a conscious decision on his part to pursue a dishonest and fraudulent tax scheme on a large scale. He engaged in the conduct the subject of the offences while holding an unshakeable belief in his intellectual superiority to all those around him and the ATO. It was his undoing.”

R v Dickson (No 18) [2015] NSWSC 268 (Supreme Court of New South Wales, Beech-Jones J, 20 March 2015).

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