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If you or your business has made an error relating to your GST obligations or other tax affairs, it can be dealt with by making a voluntary disclosure. Voluntary disclosures are free choices made on the part of an individual or organisation to provide information to the ATO on any information that relates to your tax obligations. These disclosures are generally in relation to any mistake, error or omission (intentional or accidental) that has occurred in providing tax related information to the ATO.
Disclosures will only be treated as being made voluntarily if it is made without having been prompted by the ATO. There are a number of options available for making a voluntary disclosure. These include:
- in writing
- by phone, or
- via other methods which are available in specific circumstances
Why voluntarily disclose to the ATO?
The likelihood of facing tax related offences are increasing as the ATO is continuing to expand their ability to identify over-claimed entitlements and under-reported or omitted information. However, the ATO has expressed its willingness to work together with taxpayers who make an effort to get their affairs in order. If you find an error or omission has been made, it’s important to correct the information and make a voluntary disclosure to the ATO.
If you have offshore income or assets, now is the time for you to review your overseas financial activities and make sure your tax is in order.
The recently announced Project DO IT: disclose offshore income today provides you with an opportunity to make a voluntary disclosure in return for reduced penalties and other incentives, but is only available to 19 December 2014.
You should make a voluntary disclosure if you have omitted foreign income or capital gains, or have over-claimed deductions relating to your foreign income.
For example, your foreign income may be from offshore:
- accounts, including debit and credit cards
- financial investments
- tax arrangements
- entities, such as partnerships, trusts or companies.
The ATO’s ability to detect undisclosed foreign source income is increasing. The ATO now has an international network of treaties and information exchange agreements across 100 jurisdictions and soon it will be automatically exchanging tax information with even more countries.
If your voluntary disclosure is accepted:
- it will be treated as a voluntary amendment request
- the ATO will only assess tax for the years where the time limit for amending the assessment has not yet expired (usually the last four years)
- your tax shortfall penalty will be applied at 10%, or if your additional income is $20,000 or less in a tax year, no shortfall penalties will apply
- you will not be referred for criminal investigation.
Voluntary disclosures are effective ways of minimising the impact of any penalties by improving the chances of penalties and interest being reduced. By addressing any issues you may be experiencing with the ATO, voluntary disclosures will stop the problem from getting worse, and expose you to other benefits such as improving the likelihood of avoiding:
- Serious civil and criminal penalties
- Criminal Investigation,
- Extensive ATO audits, and
- Significant legal fees.
It is important to address these issues early, as delay will only make your situation and the consequences worse. The level and opportunities of any reduction of penalty depends on when a voluntary disclosure is made. Generally a greater reduction is made when the disclosure is made before the ATO notifies you of an audit. However it is critical to understand that a taxpayer who has made a voluntary disclosure is not automatically exempt from prosecution and other penalties.
At Quinns, we can manage any necessary issues you may be experiencing with the ATO.
If voluntary disclosure isn’t the right alternative for you, there may also be other options which we can help you with. These options will vary depending on the facts of your circumstances.
Why not set up a meeting to discuss your matter further at one of our 5 convenient offices or alternatively through a Skype meeting. We can confidentially discuss how to best proceed with your matter. Contact us on 1300 QUINNS or on +61 2 9223 9166 or submit an online enquiry form.
© The Quinn Group Australia Pty Ltd ABN 86 078 526 860
The Quinn Group operates Quinn Consultants, Quinn Lawyers, Quinn Financial Planning and Quinn Financial Solutions. The Quinn Group provides related information in regard to legal, accounting and financial planning issues. Liability limited by a scheme approved under Professional Standards Legislation* *other than for the acts or omissions of financial services licensees.