Australian Tax residents who earn overseas income face intense scrutiny by the Australian Tax Office in 2015, after its amnesty closed in December, 2014.
The ATO created an amnesty for those residents who were earning foreign income but had not declared and paid the tax In Australia.
Mark Chapman, Director of Tax Communications for Australia’s largest firm of tax accountants H&R Block said “The amnesty is now over and residents again face tough penalties if they do not declare their foreign income from this year.
“The income can include interest on overseas bank accounts, foreign pensions, rent derived, investment properties, employee share schemes from overseas and all wages earned in other countries, no matter how much”, he added.
The penalties can depend on the degree of culpability the tax office determine, and can be between 20% and 100% of the tax avoided, plus over 9 per cent interest on it for the period it has been not been declared.
The ATO now receives income information electronically from third parties in Australia and tax authorities overseas, including most institutions that pay interest and dividends, as well as wages summaries from employers and pension payments
This information is used to match what is declared in tax returns. If the income declared is not the same as the income matched, the ATO will issue an income discrepancy notice.
If it is found that taxpayers have not declared all their income, the ATO will issue an amended assessment plus penalties and a general interest charge, currently 9.36% of tax avoided.
Source: H&R Block
