Whether you are an individual or own a business it is important to be aware of the tax law regarding overseas income and assets. If you or your business has offshore income or assets which has not been disclosed to the Australian Taxation Office (ATO) now is the time to do something about it. If you have entered into an arrangement or structure the purpose of which is to cover up or hide income or assets or have claimed any deduction or depended on any scheme, arrangement or false documentation to limit your taxation liability then you need to be aware of the ATO’s Offshore Voluntary Disclosure Initiative (OVDI).
The ATO is currently providing substantial concessions under the OVDI. However this is due to expire this Wednesday 30 June 2010 so action needs to be taken urgently.
The ATO is encouraging people to come forward and make disclosures in relation to offshore activities. Under the OVDI, the ATO 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 the ATO about it, you run the risk of being severely penalised should you be audited in the future. Taxpayers who voluntarily come forward will obtain a reduced shortfall penalty.
Many taxpayers 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 the Tax Office anonymously for an indication as to whether it 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. 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.
The ATO will provide an indication of whether they will refer your disclosure for investigation to determine whether there is any potential breach of the criminal law.
Here at The Quinn Group we strongly urge you to take advantage of this initiative by disclosing your offshore income under this initiative. As tax lawyers our experienced team can help you to understand more about the Offshore Voluntary Disclosure Initiative, you options and help you to disclose your overseas income in the best way for you or your business. Submit an online enquiry or call us urgently on 1300 QUINNS (784 667) or on +61 2 9223 9166 before the initiative deadline of Wednesday 30 June 2010.