ATO cracks down on international taxation debts

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Created on Tuesday, 24 January 2012 17:51

Written by Editorial staff

The Australian Taxation Office (AT) has recently concluded talks with a number of international agencies as part of its commitment to reclaim overdue debts.

Currently in the ATO's sights are high-net-worth individuals who may be making use of so-called "secrecy havens" offshore.

The meetings play an important role in the current Project Wickenby - an operation that involves multiple government organisations and is aimed at reducing tax evasion and reclaiming the funds held in opposition of existing legislation.

While some of the activities of the ATO on this front are more related to corporate actions - such as the recent court battle between the taxation office and Texas Pacific Group over the proceeds of the sale of retail giant Myer - new developments suggest the department is setting its sights on individuals as well.

The office has recently signed on to a multi-lateral agreement developed by the Organisation for Economic Co-operation and Development (OECD) that aims to increase the availability of financial information between signatory countries.

In effect this means that migrants who keep assets internationally will be able to deliver details on their estate to authorities such as the ATO with ease - and that these official organisations are able to access them as required.

While Australia's taxation system does not favour closed banking structures that obscure financial details, it is not illegal for individuals to keep their assets in countries that do so.

However, the combined approach adopted by the ATO of offshore operations like Project Wickenby and the taskforces assigned to high-net-wealth individuals means that the department now has an easier time identifying activities that suggest taxation avoidance activities.

According to the federal taxation commissioner Michael D'Ascenzo, the combined approach has netted the government over $1 billion in overdue rates.

D'Ascenzo told The Australian on January 16: "You can try and be very convoluted and go through various blind trusts and dummy companies and it makes detection that much harder, but there is greater international co-operation.

"The anecdotal information now is that advisers tell you don't do it, it is too risky."

With the increasing number of international citizens using the services of migration consultants to enter the country for business purposes on the back of the resources boom, it is important for these individuals to be aware of their obligations regarding taxation and charges whilst in the country.

In addition, the consequences of failing to adhere to local laws regarding reporting personal income, GST and other areas of legislative compliance could be severe - with the Department of Immigration and Citizenship retaining the power to revoke their residency should the need arise.

While specific business activities and accounting practices are not the concern of registered migration agents in Australia, it is still good practice to ensure that clients are aware of their rights and responsibilities attached to their visas.