On 27 March 2014 the ATO formally announced its voluntary disclosure initiative, ‘Project DO IT: disclose offshore income today’.
The content of the Media Release is as follows:
The Australian Taxation Office (ATO) is urging all taxpayers with offshore assets to declare their interests, ahead of a global crackdown on international tax havens.
The ATO's offshore voluntary disclosure initiative, 'Project DO IT: disclose offshore income today', provides a last chance opportunity for those who haven't declared their overseas assets and income to come back into the system before December 2014.
“Now is the time for individuals with offshore income to get their affairs in order and avoid steep penalties and the risk of criminal prosecution for tax avoidance,” said Commissioner of Taxation Chris Jordan.
“As governments around the world step up their data sharing and harness powerful technology to find tax cheats, the concept of the 'tax haven' is dying. It's just a matter of time before you'll be caught."
"If you’ve got international tax liabilities, act now and come forward and we’ll bring you back into the system with a heavily reduced penalty. If you don't declare your interests, you'll be caught and penalised," Mr Jordan said.
The ATO says the net is closing in on tax evaders around the world. In recent years, information sharing between countries has increased significantly with banking data exchanged automatically and the G20 promoting global tax transparency.
This initiative does not change the compliance action being undertaken on an ongoing and consistent basis. “These actions, plus enhanced information exchange mechanisms and other intelligence, means we will find hidden income.”
“There’s also the future benefits we’ll achieve by bringing these assets and income back into the Australian tax system,” Mr Jordan said.
Thanks to international cooperation, the ATO has made significant progress in collecting offshore tax revenue. Even countries previously thought of as 'tax havens', such as Switzerland and the Cayman Islands, are working to increase transparency. Last year we significantly increased our information requests and from information received were able to issue assessments worth around $480m,".
Note that under Project DO IT, people disclosing their offshore assets will generally only be assessed for the last four years, be liable for a maximum shortfall penalty of just 10% and full shortfall interest charges, and will not be investigated by the ATO or referred for criminal investigation on the basis of their disclosures. This diffesr to previous “amnesties” where taxpayers have then been referred for criminal investigation.
Please feel free to contact Whitehawk Advisors if you have any questions in relation to the above or have concerns regarding your Australian clients who have been offshore in the past.