| cent months and especially with Project Wickenby | | | | 000 in any tax year the shortfall penalty will be |
| there has been increasing attention in the press to | | | | remitted to $10% of the additional tax for the year. |
| the issue of tax evasion especially in relation to | | | | 3.The general interest charge will be reduced to nil for |
| overseas transactions which are located in tax | | | | the tax years prior to 2003.For 2003 and 2004 the |
| havens. In this respect many taxpayers may be | | | | general interest charge will be reduced to the base |
| under the belief that if there is offshore income | | | | rate. For 2005 onwards the shortfall interest charge |
| there is little need to disclose it to the tax authorities | | | | will apply |
| as there is little possibility that the Tax office will be | | | | 4.Where disclosure is made the tax office will indicate |
| able to determine the nature of it. However with | | | | to the taxpayer whether there is any breach of |
| recent announcements from the Tax Office it would | | | | criminal law. |
| seem that the Tax authorities are becoming more | | | | From the above it seems there are some positive |
| aware of the need to determine the nature of | | | | benefits arising from a taxpayer undertaking |
| offshore transactions and especially whether there | | | | appropriate disclosure under the OVDI initiative. |
| has been any avoidance of tax by the non disclosure | | | | However it is important to note that the OVDI |
| of offshore income which is assessable in Australia. In | | | | should not be taken or seen as a tax amnesty The |
| this respect taxpayers , and their advisers, should be | | | | OVDI is nothing more than an “offer” |
| aware of the penalties for non disclosure of offshore | | | | for taxpayers to come forward and voluntarily |
| income to the Tax Office. A range of penalties and | | | | disclose any omitted offshore income and or capital |
| sanctions exist which can be brought to bear by the | | | | gains or over-claimed deductions. |
| tax office which may be of a civil, administrative or | | | | Usually the purpose of a Tax Amnesty would be: |
| criminal nature. | | | | •To raise Tax Awareness; |
| On this issue, it should be remembered that the | | | | •To raise Tax Compliance, especially those |
| current tax system is based on a system of self | | | | taxpayers who are non tax compliant; |
| assessment and as a result taxpayers are required to | | | | •To Increase Tax Revenue; and |
| be aware of their obligations under the ITAA. | | | | •To eliminate any penalties, without being |
| Consequently ignorance or lack of awareness by | | | | criminally prosecuted. |
| taxpayers of their obligations is not a valid excuse | | | | As part of the OVDI initiative the ATO has also sent |
| for non compliance.. An important outcome of the | | | | letters to a number of taxpayers offering them the |
| self assessment system is that there is an obligation | | | | opportunity to make a voluntary disclosure (and |
| by all taxpayers to correctly determine their | | | | where appropriate, receive a reduction in penalty). |
| assessable income ( and appropriate deductions) to | | | | This has also been sent to to 17,000 small businesses |
| enable a determination of their taxable income and a | | | | which the ATO it had identified as working in high-risk |
| correct assessment of the tax which is due . These | | | | industries. |
| obligations extend right across the full range of | | | | It would seem that with this initiative the ATO will do |
| taxes, whether e.g. Luxury Car Tax, Fringe Benefits | | | | everything possible to assist those people who are |
| Tax, GST, Capital Gains Tax or Income Tax. | | | | trying to do the right thing but it will bring a firm hand |
| Offshore Voluntary Disclosure Initiative | | | | to bear if they identify taxpayers who are trying to |
| In order to encourage taxpayers to make a full | | | | avoid their obligations. However notwithstanding the |
| disclosure of their offshore activities, the ATO has | | | | fact that the Commissioner is encouraging voluntary |
| established an “Offshore Voluntary Disclosure | | | | compliance under the OVDI initiative , the ATO has |
| Initiative ( OVDI) to provide taxpayers with an | | | | not issued any detailed guidelines ,or any ATO |
| opportunity to make a full disclosure of their offshore | | | | practice statement, as to how he is going to deal |
| income. | | | | with taxpayers who make a voluntary disclosure to |
| The offer was announced in December of 2009 and | | | | the ATO prior to 30th of June 2010. |
| extends from 9 December 2009 to 30th of June | | | | It should be noted that taxpayers seeking to make a |
| 2010. The Commissioner said that; | | | | disclosure pursuant to the OVDI may still be liable for |
| ''We are going to wait until June 2010 and then all | | | | a criminal prosecution.Take for example, a taxpayer |
| bets are off and the law will apply … we think | | | | who makes a voluntary disclosure about his/her |
| we've given people enough notice of the opportunity | | | | offshore income before 30th June 2010 and pays the |
| to come in and get their affairs cleaned up,'' Tax | | | | tax with penalties and interest. In this respect while |
| commissioner Michael D'Ascenzo said | | | | the taxpayer may have complied with his/her tax |
| yesterday”. | | | | obligations it then does not prevent the |
| ''We're trying to explain to people that the world is | | | | Commissioner from referring the matter to the |
| starting to open up in terms of transparency | | | | Commonwealth Director of Public Prosecutions. This |
| … there are fewer places to hide now.'' | | | | despite the fact that the taxpayer is tax compliant. |
| The main features of the OVDI are; | | | | Consequently taxpayers may be wary of making a |
| 1.Where a taxpayer makes a voluntary disclosure of | | | | disclosure under the OVDI unless they seek |
| offshore income and the additional taxable income is | | | | independent legal advice from a tax lawyer if they |
| $ 20000 or less in any tax year there will be no tax | | | | fear any criminal sanctions will follow the making of a |
| shortfall penalty. | | | | voluntary disclosure to the ATO. |
| 2.Where the additional taxable income exceeds $ 20 | | | | |