Australian Tax Office To Crack Down On Tax Evaders

Post by Sharat on March 17, 2010 · Under Business News, International Business News, banking · Comment

The Australian Tax Office (ATO) is cracking down on thousands of wealthy individuals and has asked banks to warn customers using offshore tax haven accounts that they may face huge penalties for doing so.

According to a report in The Australian, the ATO has contacted a number of international lenders with Australian operations, including UBS, and requested them to warn customers of the potential of being levied with huge penalties, should they fail to declare foreign income.

Duncan Fairweather, director of the Australian Financial Markets Association says he has written to roughly 50 lenders and requested them to deliver the warning to clients on behalf of the ATO.

“We have contacted all the foreign banks working in the Australian market and asked them to remind their clients they may have tax obligations in Australia,” Mr. Fairweather said.

On Tuesday, UBS released its global annual report, which showed that Canadian, British and Australian tax authorities had filed requests for information regarding cross border wealth management services, following the tax evasion case in the US.

Last August the Swiss bank said it would reveal the identities of more than 4000 alleged tax evaders from America, as a result of legal action initiated by the US government.

“Tax and regulatory authorities in a number of countries have (subsequently) requested information relating to the cross-border wealth management services provided by UBS and other financial institutions. In particular the revenue services of Canada, the UK and Australia have served requests upon, or made inquiries of, UBS and other Swiss and non-Swiss financial institutions.” the group’s annual report said.

UBS says it will comply with those requests, but added it would only do so “strictly within the limits of financial privacy obligations under Swiss and other applicable laws.”

A spokesperson for the ATO says the office was unable to comment on the warnings as a result of privacy issues concerning the lenders.

The ATO is providing amnesty for tax evaders who have until the middle of the year to disclose international earnings.

So far approximately 500 people have surrendered under the amnesty, declaring a total of $50 million in undisclosed income since December.

About 500 people have owned up to holding $50 million in undisclosed income since December, when the ATO had originally flagged it would end the amnesty period.

Australian citizens can legally hold bank accounts in tax havens but all income earned from money held in those accounts must be disclosed to the ATO for tax purposes.

Under the terms of the Amnesty, Australian taxpayers, who hold undisclosed income internationally, would be liable for highly reduced penalties, such as a 10 per cent interest surcharge on undisclosed tax liabilities resulting from income exceeding $20,000 a year.

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