Did you know that if you are an Australian tax resident you are taxed on your worldwide income? This means you must declare all foreign sourced income in your tax return including:
· foreign pensions and annuities
· foreign employment income
· foreign investment income e.g. rental income, bank interest etc.
· foreign business income
· capital gains on overseas assets etc.
In recent years, information sharing between countries has increased significantly making it virtually impossible to hide offshore financial transactions. The ATO’s exchanges of information contributed to around $480 million of adjusted tax, penalties and interest in the 2013 financial year alone.
Earlier this year, the ATO announced an initiative called ‘Project DO IT’ which allows eligible taxpayers to come forward and voluntarily disclose unreported foreign income and assets ahead of a global crackdown on people using international tax havens.
The initiative covers amounts not reported or incorrectly reported in tax returns, including:
· foreign income or a transaction with an offshore structure
· deductions relating to foreign income that have been claimed incorrectly
· capital gains in respect of foreign assets or Australian assets transferred offshore
· income from an offshore entity that is taxable in your hands
· Offshore deductions relating to domestic income.
Under the Project DO It initiative taxpayers have an opportunity to avoid steep penalties and the risk of criminal prosecution for tax avoidance if they voluntarily disclose any omissions or errors with respect to foreign sourced income before 19 December 2014.
If you have any questions with respect to your foreign income and obligations please contact your Accountant or Client Manager and we will be happy discuss these issues further with you.