On 27 March 2014 the Australian Taxation Office (ATO) launched a voluntary disclosure of offshore income program called ‘Project DO IT’. This program allows Australian resident taxpayers who have not previously declared offshore income that they have earned in their Australian tax returns, to regularise their income tax affairs by making a voluntary disclosure to the ATO.
The benefits of taking up the ATO’s offer include:
- reduced tax penalties (a 10% tax penalty or no tax penalty at all where the tax owing in a particular tax year is AUD$20,000 or less)
- a limit on prior affected income years (the ATO will only go back and assess for Australian tax for four prior income years), and
- an agreement by the ATO not to investigate the taxpayer for criminal offences or to refer the matter to another law enforcement agency (although another law enforcement agency may independently investigate the matter).
Such a voluntary disclosure must be made in an approved form by 19 December 2014. Prior to making a disclosure, taxpayers should seek expert advice on whether they do really have an offshore income issue and how best to manage such an issue and make a voluntary disclosure if necessary.