Investors urged to declare offshore income or face penalties

Australians with undeclared offshore investments are being urged to take advantage of a once-off chance to avoid hefty fines, and a possible jail sentence, by disclosing their foreign income.

Australian Taxation Office (ATO) deputy commissioner, Michael Cranston, warned investors who have not reported their overseas earnings in the past that it was no longer a question of “if” they would be caught, but “when”.

Investors who have failed to disclose offshore assets or income can take advantage of the ATO’s Project Do It, under which they will be able to pay the tax owing plus interest, with the penalty capped at 10 per cent, Cranston said.

“Project DO IT is a never-to-be-repeated opportunity to come clean and put your offshore tax affairs in order and come back into the tax system,” he said.

“Generally, you’ll only have to pay the tax owing plus interest, on the undeclared assets or income for the past four years, with the penalty capped at 10 per cent.

“That’s a lot more lenient than the regular penalty which can be as high as 90 per cent and the ATO can go back to the beginning of any offshore arrangement.

“Project DO IT means you’ll also avoid any criminal investigation by us and we won’t voluntarily share your information with other Australian law enforcement agencies on the matters you disclose.”

While the ATO has given investors until 19 December 2014 to come clean, Cranston warned that anyone identified as having undeclared offshore investments before that time would be exposed to the full force of the law.

“If we detect your undeclared assets or income, before you come to us via Project DO IT, you’ve missed the boat, even if it’s before 19 December,” he said.

“You’ll feel the full force of the law, so my advice is…don’t put it off, make your disclosure now.”

Cranston warned Australians with offshore assets and income that the ATO can automatically exchange taxpayer information with more than 60 countries and can retrieve taxpayer information from more than 100.