Recently, a number of domestic and foreign media have published one after another, Cui Yongyuan, a former host of China Central Television, questioned the signing of a "Yin-Yang contract" by Chinese film star Fan Bingbing, implying that he was suspected of tax evasion and tax evasion, and in this regard, The topic of tax evasion in Yin-Yang contract has been discussed by Chinese community at home and abroad.
This issue of the law column collates the relevant typical cases, from the "yin-yang contract" effectiveness, tax evasion punishment and illegal liability and other aspects of refining judgment rules for readers' reference.
When the buyer and seller sign two contracts with different house prices on the same property, which contract shall prevail?
1) case brief (Facts)
In June last year, Queensland's Peter and Alex signed their first home-buying contract (the "Yin contract") as a buyer and seller. In preparation for the transfer procedures, in order to reduce the relevant tax, the two sides signed an agreement to lower prices of housing purchase and sale contract ("Yang contract").
Since the second contract (the "Yang contract") was signed by both parties for the purpose of registering the changes in housing property rights, and the house price agreed in the "Yang contract" is not the true meaning of the parties, Therefore, the second contract for the sale of houses ("Yang contract") should be deemed null and void.
2) the point of contention in the case and the rules of decision (Issue and Rule)
The main focus of the dispute in this case is that Peter and Alex have signed two contracts as buyers and sellers in the transaction process. The two contracts have different transaction amounts. Which contract is subject to which contract is the real effective sale. contract?
Such cases are commonly referred to as "yin-yang contracts" in second-hand housing transactions, that is, the buyers and sellers, after signing the first contract for the sale of houses, hide the total price of the houses from the relevant departments for the purpose of underpaying taxes and fees, and so on. Signed by Real Estate Institute Queensland (Queensland Real Estate Association) and Queensland Law
Society (Queensland Bar Association), a custom-made contract for Contract for Houses and Residential Land (housing and residential land, overstated the price at which both parties bought and sold homes.
As a result, there may be disputes between buyers and sellers due to different prices, and the validity of the two contracts may conflict.
In determining the validity of the two contracts, a distinction should first be made between the establishment and entry into force of the contract:
The establishment of a contract means that the parties voluntarily reach agreement on a particular matter, so long as the parties have the same intention, the contract shall be established;
The entry into force of a contract means that a legally established contract is legally binding between the parties, and the contract is protected by the law.
It should be said that, ostensibly, the two contracts involved in this case have been established. When there are inconsistencies in the terms of the contract, how to determine the validity of the contract?
We believe that the analysis should be made in terms of the different time and purpose of the contract between the two parties. As far as the first "negative contract" is concerned, the two parties have reached agreement on the main terms of the sale and purchase of houses, the price, and so on. According to the Australian contract Law (Australian Contract Law), the contract is established in accordance with the law, and becomes effective as soon as it is established.
At the same time, according to the Land property Law (Land Title Act), the transferee of property rights shall register the establishment and change of immovable property, that is, the Torrance Land Registration system (Torrens Title System).) shall be applied.
3) Resolution and conclusion (Application and Conclusion)
Therefore, after confirming that Alex as the seller has the right to assign, the first "negative contract" concluded by Peter as the buyer is a legally established and effective contract for the sale and purchase of houses. It is legally binding on both parties, and the law determines that the security of the transaction should be protected.
And the second "Yang contract" was signed by both parties for the purpose of registering the changes in housing property rights, in order to realize the performance of the first "Yin contract". Make the first Yin contract agreement on the change of property rights entered into by registration, so this part of the agreement should continue to be valid.
And the agreement on housing prices, because it is to reduce tax payment and deliberately false statement, the buyer and seller in order to pay less tax malicious collusion to reduce the transaction amount, damaged social interests and violated the relevant legal provisions, Therefore, the transaction amount of the "Yang contract" is not the true meaning of both parties, even if the "Yang contract" is established, there is no legal effect.
Therefore, in order to avoid tax to sign a lower house price purchase and sale "Yang contract", the contract should be deemed null and void.
Australian Inland Revenue Service (ATO) 's case of relevant penalties for tax evasion
A Chinese company is engaged in the intermediary business of gold trading, the source of revenue is to collect the relevant commission on the transaction volume. But the IRD found that the company's sales invoices did not correctly reflect the business model.
The company's business operations statement to ATO (BAS) data is based directly on the net value of the bank statement and not correctly classified by the amount sold, the purchase amount and so on in the financial system. In addition, the company's sales did not provide customers with invoices and consumption tax (GST) disputes, which led to customers refusing to pay for the goods and complaining to the Australian Revenue Authority.
The Australian Inland Revenue Authority audited the company on the basis of the complaint and found a problem, finding that the company concerned could not be deducted from the import tax on procurement, thus underpaying the consumption tax of A $13 million (GST).
In response, in 2017, Australia's administrative appeal court ruled that (AAT) asked the company to pay A $13 million in excise tax (GST), and imposed a fine of more than A $7 million on the company.
In the case of fines for non-compliance, the relevant provisions of the Australian tax Administration Act are as follows:
If there is material false and misleading information in the taxpayer's tax returns, the Inland Revenue Bureau will punish the taxpayer except in the following two cases:
- The taxpayer has fulfilled the reasonable obligation at the time of filing, and there is no subjective intentional behavior;
- The taxpayer hired a registered tax agent to conduct tax declaration work and provided all relevant tax information to the tax agent.
Once a fine is decided, the amount of the fine depends mainly on the following two points, the starting point of which is 50% of the amount required to supplement the tax, and if the taxpayer has a similar record of the fine, the starting point of the fine will be increased by 20%:
- Whether the taxpayer has the behavior of paying less tax;
- The nature of the taxpayer's perceived underpayment of taxes.
The following two links can help readers learn more about the Australian Inland Revenue Authority's interpretation of tax evasion penalties and related tax evasion adjudication rules:
- Penalties | Australian Taxation Office: https://www.ato.gov.au/general/interest-and-penalties/penalties/
- The fight against tax crime | Australian Taxation Office: https://www.ato.gov.au/General/The-fight-against-tax-crime/
The Australian Inland Revenue Bureau has very severe penalties for tax review and illegal acts, its regime efforts are centralized, its system is tight, and its supervision is also very strict, and every year it conducts rigorous investigations in different fields. General tax evasion is likely to be quickly discovered.
If Cui Yongyuan doubts that the signing of the "Yin-Yang contract" by Chinese film star Fan Bingbing has been found to be true and the case took place in Australia, the case is serious and the amount of money will be so large that the relevant Australian government authorities who come to greet Fan Ye will be asked to do so. Including, but never limited to, the Australian Federal Police, (Australian Federal Police), Australian Revenue Service, (Australian Taxation Office), Australian Crime Council, (Australian Crime Commission), Department of Justice, Australia (Attorney-General's Department),). Australia's Trade reporting and Analysis Centre (Australian Transaction Reports and Analysis Centre), Anti-Major Economic Crime Task Force (Serious Financial Crime Taskforce) and Federal Australian Federal Prosecutor's Office (Commonwealth Director of Public Prosecution).
Counsel: Lin Huiming
Legal profession qualifications in China and Australia, Doctor of legal practice in Australia, Master of International Business Law (Honours), and Bachelor of Law in China (National Scholarship)
He has published "Australia's first time Home purchase Red and White Books (legal Section)", writing more than five hundred thousand words of original Chinese and Australian legal literature on property law, international commercial law and family law.