Australia Updates Offshore Voluntary Disclosure Initiative

December 3, 2009 Offshore BankingOffshore TaxationTax HavensTaxation in Australia

Getting FleecedThe Australian Taxation Office (ATO) has announced an update to their Offshore Voluntary Disclosure Initiative (OVDI) for nationals with unreported income from offshore activities.

Amid a worldwide escalation of Government tax amnesties, Australia has joined the fray and offered its citizens an opportunity to volunteer up information regarding any unpaid tax obligations in relation to their offshore bank accounts.

In the OVDI program, only taxpayers with additional previously undeclared taxable incomes of greater than AUD20,000 will be forced to pay a penalty of 10% on the surplus income for that year. Additionally, information volunteers are also offered general interest concessions through the OVDI program. Tax transgressions occuring in 2005 or later will be charged with ATO’s Shortfall Interest Charge (SIC) rates (currently 6.30%). Unpaid tax liabilities for the 2003 and 2004 year will be levied at the ATO’s base rate (currently 3.30%), and tax payment shortfalls occuring before the end of the 2002 tax year will be charged with a nil interest rate. The OVDI offers volunteers an opportunity to approach the ATO anonymously for an “indication” of whether their tax affairs could be subjugated to criminal investigation.

The OVDI is designed to act as an accompaniment endeavour to the Project Wickenby, an Australian multi-agency compliance program which targets tax evasion. As at August 31st, 2009, Project Wickenby had resulted in 23 ongoing criminal investigations, 46 individuals being charged for serious offences and AUD440.47 million raised in liabilities. The total project expenditure as at June 30th, 2009, was reported as AUD210.8 million. Commenting on the result, Nick Sherry, Australian Assistant Treasurer, said “This means for every $1 spent on the strategy, we have brought in $2 in tax liabilities or $1.50 in tax collections – a great return for the Australian community”.

Photo by ausphoto !