AUSTRAC Guideline No. 4
- Enclosure 2

(Formerly Enclosure to CTRA Guideline No. 4)

Financial Transaction Reports Act 1988

Areas of Suspect Activity
Tax Evasion

In order to further assist Merchant Bankers and Stock Brokers to understand and identify suspect transactions, set out below are examples of activities which may indicate that the transaction could involve an evasion of attempted evasion of tax. The following examples, which are not meant to be exhaustive, may be used as a general guide for determining a basis for suspicion.

(a) A money market account with a substantial credit balance is in the name of a non-resident. Interest is accumulated in the account, after deducting 10% withholding tax. You receive information that the beneficial owner of the funds is an Australian resident and suspect that the account may be a vehicle to evade tax.

(b) An Australian public company has an offshore bank account with a branch of your merchant bank in a tax haven country. You receive instructions from the company to expect substantial deposits into the offshore account from a third party. You later discover that the third party is a European wholesaler and that the deposits are part payment for exports made by the Australian company. You suspect that the arrangement is designed to evade income tax.

(c) A corporation seeks to roll over a bill facility and in support provides financial statements for the last tax year. The level of security is assessed as being marginal and the managing director provides additional information that cost of work in progress at balance date was understated in the books as it did not take into account accumulated overheads. The managing director intimated that full accounting for overhead costs would be made at the time of completion of the relevant contracts. You suspect an unlawful tax deferral scheme.

There are as many examples of suspect activity as there are ways to evade tax. The examples in this enclosure are by no means exhaustive and may be used as a general guide for determining a basis for reporting suspect transactions.

Australian Transaction Reports and Analysis Centre (AUSTRAC)
PO Box 5516
West Chatswood NSW 1515

Telephone (02) 9950 0827 Facsimile (02) 9950 0071 DX AUSTRAC 29668