Tax Avoidance is when a person, company or partnership purposely to contrive an arrangement to avoid paying the correct amount of tax to the ATO. The tax avoider often creates a set of false transactions, sometimes using overseas entities, trusts and other devices to attempt to reduce the amount of tax payable by the person or company to the ATO. The ATO can impose heavy penalties including a prison sentence and / or a large fine for those found to be involved in Tax Avoidance schemes.