Reminder: ATO Amnesty Project Do It ends 19 December
Taxpayers with undeclared foreign assets are running out of time to take advantage of the ATO's amnesty, known as Project Do It
as the of 19 December deadline approaches.
The ATO is targeting tax evasion and money stashed in offshore assets, undeclared foreign income, capital gains and over-claimed tax deductions. Tax evasion in Australia is considered a crime and carries a 25 year maximum prison sentence if convicted.
Irrespective of whether it is intentional or not, the ATO's amnesty signals its commitment to pursuing taxpayers who do not declare these types of assets.
With the increasingly global exchange of financial information between government revenue services, the ATO already has a fairly good idea of some $550 million in assets that have not been declared.
However it's possible that people with inherited family assets may also find themselves unexpectedly in strife.
Project Do It offers an amnesty period for taxpayers to declare a range of foreign assets such as property, shares or other wealth assets worth $50,000 or more, which may include:
- 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
- Income from an offshore entity that is taxable in your hands
- Offshore deductions relating to domestic income.
Under the terms of the amnesty, only four years of offshore income is assessed and the maximum shortfall penalty is 10%. Failing to declare risks penalties of up to 90% for the tax shortfall and the risk of criminal prosecution.
A recent ABC News article highlighted the risks for post-war migrants who've made a home in Australia but may have inherited assets from family members who live overseas.
While the ATO is clearly targeting tax evasion, there is a potential risk for taxpayers whose family has kept nest eggs, property and other assets overseas for financial security. In some cases, it's their descendants who are now dealing with the messy financial problems.
Unfortunately, the ATO is unlikely to offer much leeway for taxpayers who have not dealt with inherited offshore family wealth. The amnesty is an opportunity to properly sort out and declare their affairs and face minimal penalties - and it's unlikely to occur again.
While 19 December may seem like a fair time away, the reality is that if the ATO detects undeclared assets - even before the deadline has passed - then the taxpayer will not be eligible for amnesty under Project Do It.
With just under 8 weeks until the deadline, now is the time to contact your accountant or solicitor to get foreign assets in order. Contact us on 02 9957 4033 as soon as possible to for assistance with preparing your declaration.
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Last updated October 2014. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.