Earlier this year, the Commissioner of Taxation announced Project DO IT: Disclosure offshore income today. At a high level, the aim of this project is to encourage taxpayers with undisclosed foreign income, capital gains or over-claimed deductions to come forward voluntarily and declare their interests ahead of a global crackdown on people using international tax havens.
Benefits of participating in Project DO IT
This opportunity is available to most taxpayers and there are significant carrots being offered to those who participate. In particular:
- The Commissioner will only seek to assess up to four years of undisclosed income.
- A shortfall penalty of only 10% will be payable on any tax found to be owing (it could otherwise be as high as 90%).
- No shortfall penalty will be payable if the additional undisclosed income is less than $20,000 in a particular year.
- You will not be investigated for any criminal offence, or referred to any other law enforcement agency for criminal investigation.
- You will be able to seek assurance from the ATO for the treatment of repatriated offshore assets.
- You will be able to seek a settlement deed from the ATO to obtain additional certainty.
Risks of not complying
There are significant risks should a taxpayer with undisclosed foreign income not participate in Project DO IT and later be discovered, including:
The ATO have an unlimited time period to review and amend your income tax liability where fraud or evasion is involved.
Penalties of up to 90% of the actual tax owing can be imposed, in addition to interest.
You could be investigated by the ATO, or referred to another law enforcement agency, for criminal prosecution.
Cross-border data matching is becoming increasingly sophisticated, with the chances of being found out higher than at any time in the past.
How can we help?
The cut-off date to make a voluntary disclosure under Project DO IT is 19 December 2014. If you believe that you may have undisclosed foreign income, capital gains or other concerns then please contact us as soon as possible to discuss your particular circumstances. We will determine whether we can assist you in making a voluntary disclosure to the ATO.
Aaron is the tax partner at Baumgartners. He is a Chartered Tax Adviser with 18 years’ experience advising private and corporate clients on a wide range of tax and commercial matters. Aaron also represents clients in disputes with the Australian Tax Office and state revenue authorities. Aaron holds a Master of Taxation from UNSW and is an active member of the Taxation Institute of Australia.