Australia Tightens Screws On Holders Of Undisclosed Offshore Assets

Tom Burroughes

2 July 2014

Australia’s tax collection authority is stepping up moves to get citizens to disclose offshore accounts under its Project DO IT venture.

The Australian Taxation Office is mining data to identify individuals with undisclosed offshore income and assets. Deputy Commissioner Michael Cranston said the new information would be used to encourage people to disclose under Project DO IT, the organisation said in a statement yesterday.

Under the scheme, people disclosing their offshore assets will generally be assessed for the last four years, be liable for a maximum shortfall penalty of 10 per cent and full shortfall interest charges, and will not be investigated by the ATO or referred for criminal investigation on the basis of their disclosures.

“The net is closing for people who have undeclared offshore income - we’re looking at all our data and will be in touch with financial institutions, advisers and thousands of people over the coming months,” Cranston said.

“We’ll be asking some people to explain offshore transactions and suggesting that they may want to disclose under Project DO IT. At the same time, people involved in serious tax evasion may be subject to audit,” he said.

The ATO will said it will ramp up its compliance focus by examining data including: information from overseas tax authorities on Australians with offshore investments and bank accounts; information from Australian and foreign banks on fund flows, interest and account balances; information from informants about offshore accounts, and money transfers to and from offshore bank accounts.

To date, the ATO’s Project DO IT initiative has received significant interest with166 disclosures raising an additional A$13 million in tax liabilities. There have been more than 250 expressions of interest, where taxpayers have identified themselves and said they will be making a disclosure. There have also been more than 600 general enquiries.

“We expect a large number of disclosures towards the end of the initiative as taxpayers get their affairs in order. Most people getting in touch with us are reporting accounts in Switzerland, Israel, Lichtenstein, the Netherlands, South Africa and Hong Kong, so we’ll obviously be looking closely at flow of funds to those countries,” Cranston added.

Project DO IT closes on 19 December.