Limited amnesty to disclose undeclared foreign income

As anticipated in our recent Client Newsletter, the Commissioner of Taxation, Michael D'Ascenzo, has announced a new offer for people who have not declared income from offshore activities. The offer provides a last chance, limited amnesty for people with undeclared offshore income to sort out their affairs. The offer, which was announced yesterday, is open until 30 June 2010.

Mr D'Ascenzo noted that the ATO's ability to trace fund flows around the world is constantly expanding, pointing out that Australia has signed nine tax information exchange agreements with other countries, many of which have traditionally been considered to be tax havens. The Tax Office also matches data supplied by overseas revenue agencies and AUSTRAC with income tax returns to identify undeclared foreign income. It also obtains data from financial institutions to identify Australian residents involved in foreign transactions.

The Tax Office made a similar offer in 2007. Compared to 2007, the new offer increases the shortfall penalty from five per cent to 10 per cent where a person’s additional income from offshore activities is more than $20,000 in a tax year.

Those with additional taxable income of $20,000 or less in a tax year will not have to pay a shortfall penalty for that year. This remains unchanged from the previous initiative.

Mr D’Ascenzo also said “People can now approach us anonymously for an indication of whether we would initiate an investigation to determine whether there is a potential breach of the criminal law.  He warned “This offer is not valid if we commence an audit so I remind people again — contact us before we contact you.

He added “There’s a much higher price to be paid later if we discover undeclared income through an audit process. Penalties can be as high as 90 per cent, and we will seek prosecution in serious cases.

The Commissioner's media release can be viewed at http://www.ato.gov.au/corporate/content.asp?doc=/content/00222537.htm

If you have undeclared offshore income, this is a good opportunity to get your house in order. However, ESV encourages you to consult with us prior to making disclosures. During the earlier period of amnesty, we are aware of taxpayers who approached the ATO with disclosures made in good faith which the ATO tried not to honour by relying on technicalities.

If you require more information, please contact us.

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The information in this newsletter is quite general in nature and anyone intending to apply it practically to their own circumstances should seek professional advice to verify it’s individual applicability. 

If you have any queries regarding the information contained in this
update please do not hesitate to contact us.

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