On 27 March 2014, the Australian Taxation Office (ATO) announced the initiative to encourage taxpayers to voluntarily disclose unreported foreign income and assets. This will be known as “Project DO IT” (Disclose Offshore Income Today).
It provides terms in respect of making a voluntary tax disclosure for the amounts which are not reported or previously incorrectly reported. Such amounts cover:
- foreign income or a transaction with an offshore structure,
- deductions relating to foreign income that have been claimed incorrectly,
- capital gains in respect of foreign assets or Australian assets transferred offshore; and
- income from an offshore entity that is taxable in your hands.
The benefits to taxpayers who come forward and make the voluntarily disclose under Project DO IT, include:
- Tax is only assessed for the past four assessment years, regardless of the number of years of non-disclosure.
- Penalties are 10% of the tax assessed, or nil if additional income in a year is $20,000 or less.
- There will also be an interest rate penalty (at standard rates) applied to the tax assessed.
- The ATO will not refer the case for investigation for criminal prosecutions.
- The ATO will not voluntarily refer the disclosure to another law enforcement agency.
- Only certain financial information needs to be provided.
- There is an efficient disclosure process with no obligation to meet the ATO.
Deadline for making the disclosure is 19 December 2014.
For any queries regarding the taxation aspects of the tax alert please contact Steve Fitzsimons here.