This continues my blog of 28 March titled: “Australian Tax Office Announces Terms of Foreshadowed Offshore Income Amnesty!“.
The recently announced Australian Taxation Office (ATO) offshore income amnesty is available to “All individuals, companies, corporate limited partnerships, partnerships and trusts (including superannuation funds and executors or administrators of deceased estates)” that are residents of Australia for taxation purposes. However, the amnesty is not available to individuals and entities-
1. Already being audited by the ATO
2. That have received a compulsory information gathering notice relating to offshore income or capital gains or over-claimed deductions
3. That have been involved in promoting or marketing tax evasion schemes
4. Already under criminal investigation for tax-related offences (including those under covert investigation)
5. Whose foreign assets or income were derived from serious non-tax criminal offences
6. That have not complied with specific obligations under a previous voluntary disclosure initiative
The rules regarding Australian residency for tax purposes involve both statutory provisions and common-law principles.
By-and-large, individuals are “resident” in Australia if-
• They reside in Australia
• Their domicile is in Australia (unless their permanent place of abode is outside Australia)
• They have physically been in Australia for 183 days of the tax year
Note that it is possible for an individual to be resident in both Australia and another place/s for tax purposes.
A company is “resident” in Australia if it-
• Is incorporated in Australia
• Carries on business in Australia and has either its:
o Central management and control in Australia, or
o Voting power controlled by shareholders who are themselves residents of Australia
The amnesty window of opportunity for making a voluntary disclosure closes at midnight on 18 December 2014.
Caveat: It should be noted that in Australia, the concept of legal professional privilege only applies between a client and a lawyer who holds a valid practicing certificate. Thus, it is of critical importance that individuals and entities seeking to take advantage of the amnesty ensure their accountant/tax agent liaises with an appropriately experienced lawyer.
Indeed, the writer’s advice to intending amnesty seekers is not to make any “confession” of actual non-disclosure to their accountant/tax agent unless a lawyer is present. It is suggested the only instruction to your accountant/tax agent in the first instance should be to “recommend a lawyer with whom I can discuss the Project DO IT amnesty”. It might be expected that the lawyer would thereafter engage your accountant/tax agent to undertake the necessary accounting functions to facilitate the appropriate disclosures to the ATO.