Revenue Authorities focus of taxing offshore income
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
The Tax Office launched a voluntary disclosure program which was called “Project DO IT” (disclose offshore income today) on 27 March, 2014. Errant taxpayers had until 19 December 2014 to come forward with details of untaxed offshore income and assets. Those who did were subjected to tax going back only four years and had their penalties reduced to 10%.
This was announced as a precursor to more aggressive action by the Tax Office whose efforts are being bolstered by improved information sharing arrangements with an increasing number of countries. Many countries who relied on secrecy to attract investments and trade are now shedding their reputation as tax havens and providing details to other jurisdictions.
The ATO is improving its arrangements for sharing information with overseas jurisdictions and obtaining information from them. Though its surveillance tools it understands that there are still substantial caches of undisclosed funds held offshore by Australian residents as a result of inheritances from family members.
Those who didn’t take part in Project DO IT should still voluntarily disclose the arrangements before being caught by the increasingly sophisticated methods employed by most counties who are concentrating on identifying offshore tax evasion. Given the global nature of business and transactions and the liquidity of funds flows this has become a high priority for the Tax Office and for the Government in need of increasing revenue.
The Internal Revenue Service (IRS) in the US has operated various Offshore Voluntary Disclosure Program for some time. These involve sending a fax to the IRS Criminal Investigation Lead Development Centre providing all necessary details and hoping to get a clearance to make a voluntary disclosure. This is a “get out of gaol card” and enables errant taxpayers to get their affairs straightened out at the cost of reduced civil penalties only.
However the IRS has little confidence in the efficacy of these programs hence the inauguration of the Foreign Account Tax Compliance Act (FATCA) which requires banks (not taxpayers) in offshore countries, including Australia, to provide information relating to the accounts of US citizens they hold. If you are:
- a US citizen,
- a US permanent resident (green card holder),
- a child of either of the above, or
- declared a US person by an authorised agency of the US Federal Government then, even though you may be a citizen or permanent resident of Australia or any other country it is essential that you get advice about your US tax obligations as your case will need special care and attention.
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