- Snapshot: Project Do IT
The Australian Tax Office’s Project DO IT: Limited amnesty for taxpayers with offshore income Act now to avoid prosecution! Disclosures deadline 19 December 2014.
The Australian Tax Office (ATO) recently announced a limited amnesty for individual taxpayers with an offshore income. Unlike previous amnesties, this includes only minor reductions in tax rates and penalties. The main concession offered is that taxpayers will avoid the risk of criminal prosecution for tax avoidance if they meet the 19 December deadline. Those who act in response to the amnesty will also only need to go back four years, rather than the unlimited period that normally applies for tax evasion or fraud.
The promise of follow up on those who don’t meet the deadline is no idle threat. The Australian Government has entered into many information exchange agreements in recent years giving the ATO access to comprehensive financial information for transactions in a large number of foreign jurisdictions including tax havens. When coupled with the ATO’s access to other information such as AUSTRAC reporting, the ATO can build a much stronger profile of taxpayer’s international dealings.
The ATO is interested in any cross-border transactions that may involve undisclosed income. There are many examples where this may occur including:
- undisclosed interest on foreign bank accounts or dividends or gains from foreign companies
- incorrect calculations of attributed income from Controlled Foreign Companies or Foreign Trusts
- undisclosed deemed dividends arising from non-commercial loans or other transactions with associated foreign companies (including the impact of Division 7A)
- undisclosed income and capital gains arising from inheritances from foreign deceased estates
If you have ever had any offshore transactions or interests, you should review your position. If there is any matter requiring attention, treat Project DO IT as a last opportunity to get your affairs in order, and bring your foreign assets and income back into the tax system. With a deadline of 19 December 2014 and greater complexity associated with foreign dealings, you should act promptly to ensure you can obtain the concession before it closes.