Recently the ATO attempted to reassure taxpayers by stating that declaring overseas income under Project DO IT would not result in a ‘red flag’ against their names. The deadline to access the ATO amnesty is 19 December 2014.
We have prepared a number of disclosures for taxpayers with bank accounts and other income to declare from overseas sources. We have managed disclosures for taxpayers with special circumstances by agreeing on particular action plans with the ATO on a case by case basis.
We have acted for taxpayers who have not lodged returns for a number of years after having worked overseas and have been successful in getting the ATO to limit the amended assessments to a reduced period even though they are strictly entitled to go back beyond the four year audit period. We have also had circumstances where the taxpayer’s records have been incomplete. On each occasion, the ATO has agreed a reasonable method for declaring the overseas income.
Deputy Commissioner Michael Cranston stated that the ATO was more concerned with taxpayers who did not take advantage of the amnesty rather than those that did.
‘These disclosures will enable us to put our resources onto the taxpayers who don’t come forward,’ he said.
We expect the ATO to focus resources on taxpayers who have not declared overseas income. This is particularly the case as the ATO will soon obtain access for the first time to information held by foreign banks. Australians with accounts overseas can expect to be targeted once the amnesty has concluded and the ATO starts to gather information from the foreign banks.
Obviously taxpayers who have made declarations under Project DO IT will need to be careful to correctly declare overseas income in future returns.
The window for participating in the ATO amnesty is closing, with the 19 December 2014 deadline approaching. The ATO has confirmed, however, that if an ‘expression of interest’ is lodged by 19 December, taxpayers will be given a reasonable time to obtain all the necessary information before lodging the disclosure.
The ATO acknowledge that obtaining all the necessary information can be time consuming for taxpayers and therefore even if all the facts are unknown by the deadline, an expression of interest allows the taxpayer a further amount of time (usually 90 days) to obtain this.
Please contact us if you require assistance or would like to discuss.
For further information, please see our previous article on the topic, published on 1 April 2014: ‘Project DO IT’: ATO offers partial amnesty for taxpayers who have failed to declare offshore income