Tax Commissioner Michael D’Ascenzo issued a taxpayer alert today warning people against hiding income or assets offshore.
This alert follows the Commissioner’s announcement on 26 February 2008 that the Tax Office is investigating tax evasion and avoidance involving legal structures in
“The message is simple – people should be cautious when considering whether to use offshore structures or tax havens, including
Mr D’Ascenzo reminded taxpayers that Australian residents are required to declare income generated in tax havens – or any other country – to the Tax Office.
“Australians have tax obligations for their worldwide income, including Australian and overseas sources like profits from tax haven entities and bank accounts,” Mr D’Ascenzo said.
“There are exceptions so I encourage taxpayers to read our Tax havens and tax administration booklet for more information or seek independent advice.
“People who use offshore structures to deliberately hide assets or income in tax havens, such as
“We are also concerned about circumstances where documentation supporting transactions with offshore legal structures is absent, incomplete or falsified.”
“We have increased our scrutiny of the misuse of tax havens, with increased information sharing with tax administrations in other countries and the use of more sophisticated analytical tools – meaning there is no safe place to hide undisclosed income,” Mr D’Ascenzo said.
“However, taxpayers who contact us before they are the subject of an audit may be entitled to substantial reductions in shortfall penalties under our offshore voluntary disclosure initiative.”
People can make an offshore voluntary disclosure by visiting www.ato.gov.au or calling 1300 132 346.
Any taxpayers concerned about their ownership structures or offshore dealings can contact the Tax Office, obtain their own advice or seek a formal determination of the Tax Office’s position through a private ruling.
Taxpayer alerts are available at www.ato.gov.au/atp or you can call 13 28 61.
Background
Where a taxpayer makes a voluntary disclosure and that disclosure indicates possible criminal offences, the Commonwealth Director of Public Prosecutions has indicated he will favourably consider granting an indemnity from criminal prosecution in relation to the taxpayer’s involvement in the scheme where:
- the case does not exhibit a significant degree of criminality
- the taxpayer provides information about how the arrangements worked, including the role and identity of the promoter, and
- the taxpayer co-operates with the investigation and consequential proceedings.
Taxpayer alerts are intended as an ‘early warning’ to taxpayers and their advisers of significant tax planning issues or arrangements that the Tax Office has under risk assessment.
The media release announcing the Tax Office’s investigation of tax evasion and avoidance involving legal structures in
The media release encouraging voluntary disclosures in relation to the abusive use of tax havens is also available from www.ato.gov.au – see Tax Office announces offshore voluntary disclosure initiative.
The Tax Office booklet Tax havens and tax administration is also available from www.ato.gov.au or you can call 1300 720 092 to obtain a copy.
About The Author
Warren Kruger is an Australian Tax Specialist and Advisor.
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