ATO homes in on foreign income on the back of new data sharing deals
The ATO has records relating to more than 1.6 million offshore accounts holding over $100 billion.
The Australian Taxation Office (ATO) is urging taxpayers who receive any foreign income from investments, family members or working overseas to make sure they report it this tax time.
New international data sharing agreements allow the ATO to track money across borders and identify individuals not meeting their obligations.
“This year, the ATO has received records relating to more than 1.6 million offshore accounts holding over $100 billion and is now using data matching and sophisticated analytics to identify foreign income that has not been reported,” assistant commissioner Karen Foat said.
Under the new Common Reporting Standard (CRS), the ATO has shared data on financial account information of foreign tax residents with over 65 foreign tax jurisdictions across the globe. This includes information on account holders, balances, interest and dividend payments, proceeds from the sale of assets, and other income.
“Australians that deliberately move cash overseas in an attempt to hide it should be concerned. Hiding your assets and income offshore is pointless.
“‘Tax havens’ are becoming a less effective model as international agreements improve transparency. You can no longer hide money behind borders,” Ms Foat said.
In addition to a small number of individuals deliberately engaging in tax avoidance, the ATO is concerned about a large number that are unsure of how to meet their obligations.
Ms Foat explained that all Australian residents for tax purposes are taxed on their worldwide income, meaning that they must declare all of their foreign income no matter its size.
“This may include income from offshore investments, employment, pensions, business and consulting, or capital gains on overseas assets,” Ms Foat said.
The data available to the ATO shows that many Australians have financial dealings in countries like China, the United Kingdom, Switzerland, Singapore and the United States, to name just a few.
“Whether it is rental income from your old family home, an untouched bank account earning interest or salary from working offshore, it must be reported.
“Even if you have paid tax on the overseas income, it must be reported to the ATO; however, you may be able to claim a foreign income tax offset to account for any foreign tax paid.”
The CRS data, plus existing data sets already obtained via exchange of information agreements with foreign tax authorities and from the Australian Transaction Reporting and Analysis Centre, are helping the ATO to engage with taxpayers who are struggling to report their foreign income correctly.
The ATO said it will be contacting taxpayers who have omitted foreign income, publishing new information to make foreign income and residency easier to understand, and advising Australians with more complex foreign dealings to consult a registered tax agent and make sure they are compliant with Australia’s tax laws.