Australian tax office letter

Member Joined: Oct 19, 2007 Location: Perth, WA

I have a letter sent to me by an ROV guy living in Australia but working in Asia. In the letter it is basically informing him that the ATO has monitored movement of money in and out of the country into/from his accounts and requests an explanation as to whether it is for the purpose of tax evasion. It offers him an opportunity to come clean and avoid a penalty etc etc but the message is LOUD and CLEAR. Quite a blatant indication of a very active interest in overseas earnings in the year 2010 tax year.

I am not going to attach or paste the text here as it has the guys name and details all over it but if anyone wants to ask any questions about it you may PM me and I will try to give you the information without exposing anyone/thing.

What i can say is I am glad I am not in that situation as it put the wind up me just reading it......

Member Joined: Nov 01, 2007

http://www.ato.gov.au/print.asp?doc=/content/87082.htm

Offshore voluntary disclosure

The ATO is encouraging people to come forward and make disclosures in relation to offshore activities.

Under the offshore voluntary disclosure initiative (OVDI), the Commissioner of Taxation is providing tax payers with the opportunity to make an offshore voluntary disclosure. If you have omitted your foreign income or capital gains or have over-claimed deductions, and you choose not to tell us about it, you run the risk of being audited by us in the future. Taxpayers who voluntarily come forward will obtain a reduced shortfall penalty.

Tax advisers have told us that many clients with omitted foreign income want to come forward to set things right, but are concerned about the consequences of doing so – particularly the potential for criminal investigation. The updated OVDI allows people to approach us anonymously for an indication as to whether we would undertake an investigation to determine whether there is any potential breach of the criminal law.

In considering whether to investigate a matter, the ATO views favourably taxpayers who make a voluntary disclosure and cooperate with them or with law enforcement agencies.

Benefits

Under this initiative, eligible taxpayers who make a named offshore voluntary disclosure will receive the following benefits:

If you make an offshore voluntary disclosure and your additional taxable income is $20,000 or less in a tax year, you will not have to pay a shortfall penalty for that year.
If your additional taxable income exceeds $20,000 in any tax year, your shortfall penalty will be remitted to 10% of the additional tax for that year.
The general interest charge will be reduced to nil for the tax years up to and including the 2002 tax year. The general interest charge will be reduced to the base rate for the 2003 and 2004 tax years. Shortfall interest charge applies for 2005 and later years at the normal rates.
We will provide an indication of whether we will refer your disclosure for investigation to determine whether there is any potential breach of the criminal law.

To qualify for this concessional treatment taxpayers need to submit a voluntary disclosure in writing on the Making an offshore voluntary disclosure statement (NAT 71149). This form can be downloaded from our website.

If you have undeclared foreign income, (this includes Australian income diverted offshore and deemed or attributed income), we strongly urge you to take advantage of this initiative by disclosing your offshore income under this initiative - it is available until 30 June 2010.

We are increasing our audit activities in cases where people may try to conceal income and assets offshore, particularly in low tax and bank secrecy jurisdictions. Working closely with AUSTRAC, banks and other overseas tax jurisdictions, we are continuing to improve our ability to trace fund flows around the world and our capacity to identify Australians with income and assets hidden offshore.

You may receive correspondence from your bank or from the ATO about the compliance program and this voluntary disclosure initiative.

We are working with some financial institutions in Australia. Some of these financial institutions will write to their Australian customers who hold offshore accounts informing them of this opportunity and how to make a voluntary disclosure, if they need to do so.

We are also sending letters to individuals we have identified using AUSTRAC data and other information as having significant offshore transactions.

Helping people do the right thing, and taking a firm approach with those who don’t, builds confidence in the tax system and helps create a level playing field for all taxpayers.

More information
Offshore voluntary disclosure – frequently asked questions
Making an offshore voluntary disclosure
Tax havens and tax administration

(use the link at the top to access the more info links)

Last Modified: Tuesday, 12 January 2010