Taxation Law - undeclared interest and offshore capital gains

Recently, Michael Pickering acted for a client who had inadvertently overlooked disclosing in his personal tax returns bank interest from international bank accounts and capital gains made on the sale of securities listed on overseas sharemarkets. 

The bank accounts had been established some 20 years earlier.   The capital gains had been generated approximately 3 years ago. 

Michael Pickering suggested to the client that he take advantage of the Australian Taxation Office’s voluntary disclosure regime arising from Project Wickenby.   However, difficult issues arose as to what should be the subject of disclosure.

Under the Income Tax Administration Legislation, the Commissioner of Taxation has the ability to open up and amend a taxpayer’s annual returns for various periods depending upon whether non-disclosed income was derived under a scheme, or from evasion, or otherwise. In the present case, the taxpayer client had regularly filed income tax returns over the last twenty years but without ever disclosing the overseas bank interest or the overseas securities’ capital gains. 

Mr. Pickering suggested to the taxpayer that he provide limited disclosure for some capital gains and bank interest credited to the taxpayer due to the taxpayer’s special circumstances.  Mr. Pickering took the view that this was in accordance with the spirit of the ATO’s voluntary disclosure regime.  

The ATO agreed with the approach adopted by the taxpayer and the advice provided by Mr. Pickering.  No fines, penalties or GIC were imposed by the ATO on the disclosed increased annual assessments.

Mr. Pickering was also able to assist the taxpayer explaining to the ATO why the taxable income and capital had been overlooked.

The client wrote to Mr. Pickering stating that the amended assessment was “… a great result and I thank you for your wise counsel in orchestrating this result.”