Time is running out to disclose offshore income – November 2014

Time is running out to disclose offshore income

The Tax Office has issued a final warning — taxpayers with undeclared offshore assets or income are running out of time and need to act now if they want to take advantage of an amnesty that runs out by December 19.

The Tax Office said that the rare opportunity provided by its offshore voluntary disclosure initiative is unlikely to be repeated. Its “Project DO IT” (disclose offshore income today) allows eligible taxpayers to come forward and voluntarily disclose unreported foreign income and assets, such as amounts not reported or in tax returns.

These can include:

  • foreign income or a transaction with an offshore structure
  • deductions relating to foreign income that have been claimed incorrectly
  • capital gains in respect of foreign assets or Australian assets transferred offshore
  • income from an offshore entity that is taxable in your hands
  • offshore deductions relating to domestic income.

The Tax Office said that coming forward now, ahead of a global crackdown on people using international tax havens, is the last chance for many taxpayers to escape hefty fines. With the increased global exchange of financial information, it said that it is almost certain that taxpayers doing the wrong thing with their international assets will be caught.

“Increased international cooperation means the net is closing in on tax evaders around the world,” the Tax Office said in a statement. “In recent years, information sharing between countries has increased significantly. Banking data is being exchanged routinely and automatically, and the G20 is promoting global tax transparency. Even countries previously thought of as tax havens, such as Switzerland and the Cayman Islands, are working with tax authorities around the world to increase financial transparency.”

Under the initiative, taxpayers have an opportunity to avoid steep penalties and the risk of criminal prosecution for tax avoidance. By voluntarily coming forward before the deadline, taxpayers can also limit assessment to only the last four years and a shortfall penalty of 10%. Ask this office for guidance if you, or anyone you know, would like to take advantage of the offshore income disclosure amnesty.

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