The ATO will be paying close attention this tax time on taxpayers correctly reporting all sources of foreign income on their tax return.
Accordingly, tax practitioners may hear from the ATO if their practice reports a large amount of foreign losses.
Practitioners and clients may also be contacted if the Tax Office receives information from a foreign revenue authority or other third parties indicating that a client may have received income from another country.
The Common Reporting Standard (CRS) gives the ATO access to financial account data from over 65 foreign jurisdictions which have committed to exchanging information with each other.
ATO assistant commissioner Karen Foat said that with financial account information of more than 1.6 million offshore accounts holding over $100 billion now available to the agency, hiding assets and income offshore was now “pointless”.
“If you’re an Australian resident for tax purposes, you are taxed on your worldwide income, so you must declare all of your foreign income no matter how small the amount may be. This may include income from offshore investments, employment, pensions, business and consulting, or capital gains on overseas assets,” Ms Foat said.
“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.”
Foreign income includes most pensions and annuities, interest, dividends, royalties, rent, capital gains and personal services income.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.