ATO to seek explanations for offshore tax arrangement
High net worth individuals using offshore tax arrangements will come under greater scrutiny and prosecution after the Australian Tax Office (ATO) revealed it had data detailing the use of offshore structures to conceal assets.
Financial advisers, accountants and lawyers who represent individuals have also been identified and the ATO has stated that at present more than 100 Australians have been listed.
The data, drawn together from consultation with US and UK tax authorities, details complex tax structures operating in Singapore, British Virgin Islands, Cayman Islands and Cook Islands.
The ATO said it was not illegal to operate an offshore tax structure but it was concerned that often the main purpose was to hide assets, create false loans and inflate tax deductions - and avoid tax liabilities.
“These arrangements may be perfectly legitimate or may involve tax avoidance, evasion or other serious offences by taxpayers, and we need to look closely at the information we now hold,” Tax Commissioner Chris Jordan said.
From next week the ATO will be in contact with people identified to seek explanations for their tax arrangements. It has encouraged people to make early voluntary disclosures which may in turn lead to a reduction in penalties.
In the event people choose not to co-operate, the ATO has indicated it will use its regulatory and enforcement powers.
Large fines and criminal prosecution may apply to deliberate tax evaders and those who have knowingly provided advice for the same.
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