The Australian Taxation Office has urged anyone who owns assets and income in a tax haven and hasn’t paid Australian tax on it to dob themselves in. The ATO yesterday released Tax havens and tax administration booklet outlining its concerns with tax haven arrangements and advice on how people can get their tax affairs in order.
Speaking to the Chartered Accountants Technical Conference in Sydney, Acting Commissioner of Taxation Jennie Granger urged shonky investors to take advantage of the significant penalty concessions if they come forward and tell their tax cheating sins. Cheats who have not declared $20,000 or less will receive no penalty. Over this the penalty is capped at 5% penalty.
Tax Chief Michael D’Ascenzo announced the amnesty in July this year. This also coincided with an ATO project with Australian banks that have branches/subsidiaries in Vanuatu to inform Australian account holders of the opportunity to come forward if they haven’t declared their income. Over 1000 letters were sent to people who have transactions with tax havens or offshore credit/debit cards. So far 91 tax cheats have come forward declaring $4.6 million taxable income previously not reported.
That’s small bickies when you compare it to other countries where a similar exercise was done. Ireland collected almost 840 million Euros from about 15,000 residents while in the UK a similar project has generated 65,000 disclosures.
Is this the usual ATO scare campaign? Well, if I was concealing assets and income in Bermuda, Antigua Barbuda and the Netherlands Antilles I would be coming forward with bells and whistles on to confess my sins to Mr D’Ascenzo. This is because the tax office has signed Tax Information Exchange Agreements (TIEAs) with those tax havens which allows them to request information if non-compliance is suspected.
Negotiations are underway with seven other tax havens. While the Treasurer’s Office and the ATO would not release the names of the countries to me, I would be getting very nervous if I had funny money in Jersey, Guernsey, the Isle of Man, the British Virgin Islands, the Cayman Islands, Anguilla, Granada and Vanuatu.
If I had it hidden in a tax haven that does not have an agreement to exchange information with Australia, such as Andorra or Monaco, or the country has a strict bank secrecy regime that does not allow the ATO to directly obtain detailed information about the offshore bank account, then put the feet up and keep enjoying those Pina Coladas.