Australia Escalates Fight on Offshore Evasion

April 15, 2010 Taxation in Australia

Commonwealth Bank of AustraliaThe Australian Tax Office (ATO) is stepping up its efforts to eliminate offshore tax evasion by requesting customer information from national financial institutions. The data will be used in fresh investigations on Australians with undeclared offshore bank incomes.

On April 14th the ATO issued a press release detailing its new data-matching program aimed at identifying and investigating Australian taxpayers with undeclared offshore incomes or over-claimed tax deductions involving international transactions. The ATO has revealed that national financial institutions will be requested to provide data on their clients for the operation. The received information will be inspected alongside the ATO’s own data to discover individuals potentially committing tax evasion. The sought after information pertains to the period between July 1st 2005 and June 30th 2009. The ATO believes that 100 000 individuals and entities with discrepancies in their tax and bank data will be discovered.

According to the latest issue of the Australian Government Notice Gazette, which was released on April 14th, 9 of Australia’s major financial institutions will be contacted during the data matching program. The Gazette also said that 37 subsidiary branches of international financial institutions operating in Australia will be approached, along with 7 clearing houses, and four major credit card providers. The notice emphasized that additional organizations could be contacted during the course of the program.

Explaining the intention of the initiative Michael D’Ascenzo, Australian Tax Commissioner, said: “…there is nothing wrong with holding an offshore account or investing overseas as long as you pay any Australian tax due…our aim is to identify people who may be deliberately trying to hide income or assets offshore.”

The ATO encouraged individuals who knowingly hid offshore incomes to disclose the appropriate information now to receive reduced penalties. Under the initiative, Australian nationals are able to approach the ATO anonymously and receive assessment of whether they have potentially breached tax legislation. The offer expires on June 30th 2010.

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