Harry Korras, 44, has avoided spending time behind bars after admitting to short-changing the Australian Taxation Office by $85,638.

The security company Korras co-founded, ACG Security, avoided paying money to the ATO between 2011 and 2014 by using two subcontractors who paid their employees untaxed cash "off the books".

Several security workers thought they were employed by ACG Security when they were in fact employed by the two subcontractors, who have been Korras' co-accused.

ACG Security was purchased by Spotless in 2014, with Korras now working as a motivational speaker, consultant and event manager for touring celebrities.

He was pictured beside Schwarzenegger when the star visited Melbourne for a health expo that bears his name last year. Korras worked at the event.

County Court of Victoria Judge Douglas Trapnell on Tuesday noted Korras had not instigated the tax evasion scheme. But he turned a blind eye to it, leading the judge to believe his moral culpability remained high.

"You were in a position to stop the offending conduct," Judge Trapnell said.

Korras and his co-accused were charged in 2015 after a series of raids.

Judge Trapnell said it was crucial to deter others considering a similar crime.

"General deterrence and denunciation are prime considerations in sentencing you for this offence," he said.

"Because the tax system is based on trust, it is open to abuse.

"Your crime is not victimless, because the burden of fraud perpetrated on the Commonwealth government falls on the entire Australian community."

The judge also took into account Korras paying the money back to the ATO in full and the care he provides to his mother, who had long struggled with health issues.

He sentenced Korras to two-and-a-half years in prison, but he will not spend any time in jail after being released on an order that he be of good behaviour.

He will need to pay $5000 to instigate the order and has been fined another $10,000.

Australian Associated Press