New ATO offshore voluntary disclosure initiative
Australian Taxation Office’s ‘Disclose Offshore Income Today -2014 program'DOWNLOAD
27 March 2014: The Australian Taxation Office (ATO) has today released its ‘Disclose Offshore Income Today – 2014 program’ (the Initiative). Following previous ‘offshore voluntary disclosure initiatives’, the Initiative provides an amnesty (albeit with penalties and interest) for Australian taxpayers with undeclared offshore income and assets.
Deloitte Partner and Director of Deloitte Lawyers, James Fabijancic, said that Deloitte recognised the importance of this new Initiative as offering those Australian taxpayers who, for whatever reason, have income and assets outside of Australia, the opportunity to get their offshore tax affairs in order with a level of certainty.
“The Initiative comes at a time when the ATO has expanded its data-matching capabilities, linking Australian taxpayers with their offshore income and assets. At the same time, the ATO is receiving a significantly increased quantity of information from overseas tax authorities and will soon be automatically exchanging information.
“In this changing global environment, it is perhaps not a question of ‘if’, so much as ‘when’ Australian taxpayers with income and assets outside of the Australian tax net will become the focus of ATO compliance activity. In the absence of the Initiative (and correct disclosure in this regard), the ATO may assert fraud and evasion, resulting in the ATO issuing amended assessments for an unlimited number of years, with significant shortfall penalties and interest.”
Operating until 19 December 2014, the Initiative offers the certainty of the ATO only seeking to amend those tax years which are currently open (usually the last four years), along with an imposition of an automatic shortfall penalty and interest on any tax shortfall amounts.
In addition, for eligible disclosures, the ATO will not assert ‘fraud or evasion’ (which would allow the ATO to amend beyond those open tax years) or investigate matters for criminal prosecution. The ATO is also proposing to provide assistance and certainty to taxpayers wishing to ‘wind up’ their offshore structures.
In return, taxpayers are required to make full disclosure of offshore income and gains (and over-claimed deductions), disclose all offshore structures and assets, and provide details of the advisers who assisted in establishing or maintaining their offshore structures.
“Based on Deloitte Tax Controversy specialists’ experience in assisting taxpayers in making voluntary disclosures (including under previous ATO ‘offshore voluntary disclosure initiatives’), the Initiative is a positive move from the ATO and should be seen as such by Australian taxpayers,” observed James Fabijancic.
“Whilst Deloitte welcomes the Initiative, taxpayers should however be wary of the pitfalls resulting from incorrect, or lack of full and complete, disclosure (including providing details of advisers who assisted in establishing or maintaining the offshore structures). Failure in this regard may result in taxpayers being unable to access the certainty offered under the Initiative.”
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