Australian Tax Amnesty Announced
In the early hours of Thursday Morning, Australia announced a tax amnesty on any tax resident with offshore assets not declared to the Australian Taxation Office
Geraint Davies, Managing Director of Montfort International sees this move as significant from many perspectives. “We have seen the breaking news of a complete re-vamp of pensions in the UK. We see taxation rules getting more and more complicated with the man in the street often oblivious of what might be taxed and what might not be. A classic case of not knowing what you don’t know and if you don’t know what you don’t know – what do you do? There is no line of separation between the tax cheat and the seemingly innocent. Anybody, big or small who has a financial connection with Australia has a tax connection.”
The thoughts are that many migrants and returning nationals as well as perhaps many financial advisers could see themselves caught up in this whole issue all because of a lack of awareness of what is within range. It seems any asset or income held outside Australia is within range
“We have the traditional bank accounts held in offshore tax havens. But we also have undeclared UK pensions, Qualifying Recognised Overseas Pension Schemes and Qualifying Non-UK Pension Schemes, both in the accumulation and decumulation phase as well as ISA’s and Premium Bond wins, then there are of course rented out properties, share portfolios, endowments, inheritances kept ex-Australia that need to be considered”.
A senior Australian tax officer advised that people disclosing their offshore assets would be assessed for the last four years only and be liable for a maximum shortfall penalty of ten per cent of their debt instead of 90 per cent. They will have to pay the tax due plus interest for late payment
It seems those volunteering will escape investigation by the Australian Taxation Office (ATO) and criminal prosecution. But those that don’t could see very high penalties and even custodial sentences in the most serious of cases.
“We at Montfort believe that many will come forward for fear of what the ATO have in mind, these penalties of having to pay now are extremely light. However those not facing up to their obligations now face serious problems as those that come forward will give clues as to where the undeclared assets and income are being held. Pensions undeclared might pose an interesting set of questions now that the full access to the pension is proposed UK legislation. Could a migrant seeAustralia raising tax due on the now withdrawn Foreign Investment Fund (FIF) tax legislation where offshore holdings such as UK pensions are discovered? This FIF legislation caught private pensions. Interesting times!
Is this an Australian only phenomenon?
“No” says Davies. “I think Governments around the world will unite, the data sharing and powerful technical advances in data capture and analysis are on the side of the tax offices around the world and whether or big or small, any excuse of not knowing about a tax rule will not wash. I think that UK advisers tend to forget that UK is offshore to Australia. We see advisers who have purely focused on selling QROPS and QNUPS might well find themselves having to answer questions as to why they didn’t recommend advice on non-commission earning advice areas”
It’s clear Australia is on a mission.
“Any migrant or returning national past or present really needs to have a financial health check at the earliest opportunity to check if they have an exposure. It’s clear that Australia will now be not just looking back in time but will not want to lose tax revenue going forward. Hence nobody will want a penalty that could be greater in value than the asset being hidden”
Credit: Australia Magazine