Taxation Law - Global Transparency: High Net Wealth Individuals, Tax Information Exchange Agreements and Multinationals: Country by Country Reporting - Part 4

Other articles in this series;

• Taxation Law - Global Transparency: High Net Wealth Individuals, Tax Information Exchange Agreements and Multinationals: Country by Country Reporting - Part 1
• Taxation Law - Global Transparency: High Net Wealth Individuals, Tax Information Exchange Agreements and Multinationals: Country by Country Reporting - Part 2
• Taxation Law - Global Transparency: High Net Wealth Individuals, Tax Information Exchange Agreements and Multinationals: Country by Country Reporting - Part 3

The Australian Tax Office: Targeting High Net Wealth Individuals in the Spotlight

According to the OECD report, high net wealth individuals present tax authorities with challenges with respect to the following;

1. the taxpayers complexity of their affairs;
2. the amounts of tax at risk from particular countries, including Australia; and
3. taxpayers who potentially use Aggressive Tax Planning and;
4. the report discusses aspects of voluntary disclosure inititatives for past non compliance.

In order to understand the affairs of high net wealth individuals who have complex tax structures, the questions that have been raised in the report are as follows;

1. the residence and source of the taxpayers income;
2. the application of double tax treaties;
3. the application of the taxpayers foreign entities; and 
4. an understanding of the taxpayers links and relationships with each entity.

Since the release of the OECD report earlier this year on High Net Wealth Individuals, the Australian Taxation Office has stepped up its audits and those individuals who use offshore entities and or enter into aggressive tax planning. A key driver to all this, is the gathering and usage of information from publicly available information; such things include, but not limited to, the following;

1. magazines;
2. newspapers;
3. details about lifetyles;
4. properties;
5. personal interests
6. location from where the taxpayer conducts business;
7. internet search engines;
8. facebook;
9. myspace;
10. you tube;
11. court documents;
12. Australian Securties and Investment Commission;
13. Australian Federal Police;
14. Australian Crime Commission
15. Centrelink;
16. Interpol;
17. Land Titles Office;
18. Overseas tax authorities, e.g., Joint International Tax Shelter Information Centre; Aggressive Tax Planning Directory. This provides a platform for sharing non-taxpayer-specific information on aggressive schemes.

The above information allows the ATO to create a profile of the taxpayer, which then allows the ATO to build a prima facie case against the taxpayer who uses offshore entities and or uses tax shelters for the purposes for money laundering and or tax evasion.

Conclusion – Make an Unprompted Voluntary Disclosure to the ATO?

If taxpayers have an appetite for aggressive tax planning and or have in the past entered into aggressive tax planning using offshore entities, then it’s a good idea now to make an unprompted voluntary disclosure, which will, depending on your circumstances, reduce the exposure of being criminally prosecuted and also reduce the penalties imposed. In circumstances where you are found to be tax non-compliant the matter will be referred to the Commonwealth Director of Public Prosecutions for action. Whatever your circumstances, should you be at risk call Frank Egan of LAC Lawyers for timely taxation advice and assistance. Confidentiality is assured.