Ridley v R

Sentencing Factors in Serious Revenue Fraud

In a case whose principles are likely to be echoed in New Zealand Courts, the Supreme Court of New South Wales has dismissed appeals against conviction and sentence for serious GST fraud.

The taxpayer was unable to find funding for a process that turned old tyres into recyclable rubber pellets and so set about claiming over A$1 million in GST refunds. The refunds were claimed on the basis of related party transactions, none of which had actually been carried into effect and the documentation for which seemed to have been prepared only shortly before the Australian Tax Office executed search warrants.

The taxpayer argued that the sentence passed on him (8 years imprisonment with a 5 year non-parole period) was excessive. The Court rejected that saying that the fraud that had been committed was on the whole community and not just the Commissioner. The tax system was based on a mutual community trust relating to honest self assessment, which the taxpayer had broken and although deterrence had to be balanced against other sentencing factors, it was of high significance. Tax fraud was notoriously difficult to detect and prosecute and the Court held that deterrence had been adequately balanced against other factors such as character, community standing, and absence of a criminal record, so that the sentence was not manifestly excessive.

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E.  geoff.clews@taxcounsel.co.nz