Tax tip: Amnesty time

The tax office has announced an amnesty for taxpayers with unreported offshore financial activities, codenamed Project DO IT (disclose offshore income today). Among the transactions it’s interested in are interest income from offshore bank accounts, undeclared capital gains on overseas assets and ongoing income flows from businesses owned overseas.

Though it’s not explicitly saying so, the main target appears to be migrants to Australia who have retained business, property or other financial links with their country of birth, together with the children or grandchildren of such migrants who may now be looking for an opportunity to declare their offshore interests but have been unwilling to do so because of the potentially large penalties they faced.

This isn’t the first tax amnesty. What makes this one different is its generosity. The ATO will cap penalties at 10% of the outstanding tax (otherwise they could be up to 90%), it will assess only the most recent four years of undeclared income and it will not take criminal action against those who disclose.

Taxpayers have until December 19, 2014, to come forward, with disclosures to be made using the form on the tax office website

(www.ato.gov.au). After that, the ATO is promising a renewed crackdown on offshore tax avoidance.