Undisclosed offshore income

The ATO’s Project DO IT (Disclose Offshore Income Today) offers taxpayers with unreported income from offshore investments, the opportunity to make a full voluntary disclosure. In return, the ATO will reduce tax penalties to 10% and will only look back over the past four years, and states it is even willing to discuss ways of repatriating offshore assets to Australia in a tax effective manner.

For some taxpayers, this is an opportunity to fix up tax problems which may have come about because of outdated or bad advice or because of offshore assets bequeathed by deceased family members.

We encourage clients to comply with legal obligations in respect of offshore assets. If any client has offshore assets and would like their circumstances reviewed we will be pleased to assist.

The ATO are also encouraging taxpayers to wind-up offshore structures and return assets to Australian entities that are clearly subject to tax in Australia.

We do not think the answer is to necessarily transfer assets to Australian entities. This may not be appropriate, or feasible, and a blanket comment like this lacks commerciality.

Discussion regarding capital gains would also be relevant to such an arrangement.

However, having a large number of clients operating and investing internationally, we assist to put in place proper structures compliance with Australian tax laws. For anyone with offshore assets that have not been declared, even if they are not income producing, this is a good opportunity to disclose them.