Recent reports in the Australian Financial Review state that the Australian Taxation Office (ATO) has been contacting private clients of Credit Suisse in regards to what it considers suspicious transactions and secret overseas accounts.

This appears to be the latest step by the ATO to clamp down on tax evasion through unreported foreign income and assets. For some time now revenue authorities worldwide have been looking into the affairs of taxpayers making use of (the so called) foreign tax havens.

The ATO data matching capabilities and information sharing arrangements with other countries is unprecedented and increasingly sophisticated in uncovering undisclosed income and assets.

We say

  • In 2008 President Obama commented on the ‘infamous’ Ugland House building in the Cayman Islands (either the biggest building in the world – or the biggest ‘tax haven’) 
  •  A former employee of UBS turned whistle-blower, which prompted an investigation into US citizens using Swiss bank accounts
  • USA regulators told Credit Suisse amongst other Swiss investment banks that unless they disgorged the names of US citizens with accounts they would be reviewing their banking licenses in the US
  • The Swiss banks decided to disclose names which effectively brought about an end to the ‘secrecy’ laws of their country (the Australian Government along with many other countries followed suit)
  • This was what heralded the collapse of many of the tax havens
  • In 2014 the ATO (realising that many of these accounts dated back to post WWII – a couple of generations) launched Project DO IT
  • It was designed to give Australians the chance to make voluntary disclosures of their offshore income and assets – it closed in December 2014 
  • The terms of the amnesty offered was that the ATO would only assess on the last four years (as opposed to going indefinitely under the Commissioner’s fraud/evasion powers); and cap the penalties (10% shortfall penalty); and the matter would not be referred for criminal investigation.