ATO urges taxpayers with undeclared offshore assets or income to come forward before December 19.

The Australian Taxation Office (ATO) has urged those taxpayers with offshore assets to declare their interests ahead of a global crackdown on people using international tax havens.  In March this year, the Commissioner of Taxation announced the ‘Project DO IT’ initiative (Declare Offshore Income Today), which offers a range of benefits for eligible taxpayers to come forward and voluntarily disclose unreported foreign income and assets.

To encourage people to come forward, the ATO have offered the following terms:

·      Tax is only assessed for the past four assessment years, regardless of the number of years of non-disclosure.

·      Penalties are 10%, or nil if additional income in a year is $20,000 or less.

·      The ATO will not refer those who declare assets for investigation for criminal prosecutions.

·      Assurance and certainty can be given on the tax effects of winding up offshore structures and bringing offshore assets back to Australia.

·      There is an efficient disclosure process with no obligation to meet the ATO, and,

·      Those volunteering information have up until 19 December 2014 to do so under this scheme.

This project stems from the ATO’s recent and increased focus on examining global data exchanged with a network of over 100 jurisdictions, many of which have historically been viewed as tax havens. The ATO warns that the net is closing for people who have undeclared offshore income/assets; commenting that it will be contacting financial institutions, advisors and thousands of individual taxpayers over the coming months.

As of June 29, over 166 disclosures raising an additional $13 million in tax liabilities had been made. There had also been over 250 expressions of interest and more than 600 general inquiries. The majority of people getting in touch with the ATO regarding the project are reporting accounts in Switzerland, Israel, Lichtenstein, the Netherlands, South Africa and Hong Kong.

To participate in Project DO IT, taxpayers must make a voluntary disclosure to the ATO in the approved form before 19 December 2014, outlining all relevant information and material facts. If you need time to organise your records, you can lodge an expression of interest to participate in the initiative. On the other hand, the ATO have warned those who choose not to make a disclosure will have the full weight of the law brought down upon them. As a consequence, they may be subject to severe financial penalties (up to 90% tax shortfall) and criminal prosecution for tax avoidance.