The Australian Taxation office released the following bulletin regarding Offshore Income today.  If you derive offshore income and are concerned you may have overlooked or inadvertently omitted the income then please contact us to discuss.

Declare offshore income now

If you have unreported income from offshore activities and want to come forward to set things right, now is the time to report it.

In many cases, taxpayers have unreported offshore income if they:

• change their country of residence, or
• are unsure how to deal with investments in offshore funds or bank accounts

Many clients 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. This offer provides the following benefits:

• clients can approach the ATO anonymously
• ATO will indicate whether they would investigate their arrangements for any potential criminal law breaches
• reduced shortfall penalties
• concessions for the general interest charge

The ATO’s new offshore voluntary disclosure initiative (OVDI) is available to all taxpayers until 30 June 2010.

Reduced penalties for coming forward

If your additional taxable income after coming forward is:

-          $20,000 or less in a tax year, you will not need to pay a shortfall penalty for that year, or

-           More than $20,000, the ATO will apply the shortfall penalty at 10% for that year.

If you have difficulties meeting payment obligations, the ATO will develop a payment plan taking your circumstances into consideration.

Audit activity

It is important for people to take early advantage of OVDI benefits as these benefits will not be available after notification of an audit.

The ATO work closely with AUSTRAC, banks and other overseas tax jurisdictions to identify people with undeclared income, including those with highly complex and sophisticated arrangements and are constantly expanding their ability to trace fund flows around the world.

If taxpayers intentionally disregard the tax law and do not voluntary disclose their offshore income, penalties can be up to 90% of the tax shortfall.

More information

For more information about making a voluntary disclosure, visit the ATO website at www.ato.gov.au/offshorevoluntarydisclosure or call them on 1300 132 346, alternatively call us here at Walker Lawrence Watson.