Tax Evasion - Offshore Activities

All member countries of the OECD’s forum on tax administration including Australia are working together to identify taxpayers’ bank accounts linked to Lichtenstein to counter the effects of tax evasion. The ATO’s focus is Australian taxpayers who have abusively used offshore bank accounts, offshore financial products, offshore tax arrangements including sham arrangements and/or offshore structures. The ATO’s focus is the identification and eradication of abusive offshore tax arrangements which defeat the revenue from collecting its full entitlements to tax. Both deterrence and the public interest are at the forefront of their mind. They have made it clear that they are targeting high net-worth individuals and certain corporate or other entities to increase tax collections to which they believe they are entitled. As we have seen with the new anti-money laundering provisions the banks are playing a pivotal role with respect to tax compliance. A number of Australian banks are currently co-operating with the ATO which has led to the dissemination of correspondence to account holders who have received substantial deposits from overseas sources. 

The ATO is looking for overseas hidden income and/or assets. The Tax Office has made it clear that Australian residents are required to declare income generated in tax havens or any other country as Australians are taxed on their worldwide income irrespective of where the income is earned. Many overseas transactions which relate to the use of tax havens involve false documentation which is used to support transactions with offshore legal structures which speaks for itself. Although the ATO suggests there is no safe place to hide undisclosed income this is not necessarily correct. Despite this if a lack of transparency is required to make a taxation arrangement effective, then, it is highly likely that it amounts to tax evasion irrespective of what your advisers tell you and if it is you will face serious penalties including criminal prosecution following detection and audit.

A good example of just how far the Tax Office is prepared to go is demonstrated by the matter of Michael John Milne, 52 yo, whose premises at Neutral Bay and Sydney CBD were recently raided by officers from the AFP and the ATO. It is alleged that he was arrested for an alleged multi-million dollar offshore tax evasion scam through which he avoided paying tax by utilising an intricate network of local and offshore companies. It is alleged that offshore income was concealed from the ATO by a series of offshore and onshore structures which would eventually allow the money to be repatriated back to Australia.

It is these red flags which lead the ATO and the AFP to thoroughly investigate the background and individual circumstances of these taxpayers which often leads to a host of fraudulent transactions involving the use of entities in Australia which either control or conceal benefits obtained by a non-complying taxpayer and leads to criminal charges and prosecution. Whatever your circumstances, should you be at risk because you are either likely to be or have been detected, call LAC Lawyers for competent taxation advice and assistance now. Confidentiality is assured.