ATO asks banks to hand over records of clients with offshore bank accounts

If you’re using offshore havens to avoid paying your tax bill, the Australian Taxation Office has a message – own up, or we’re coming after you.

The ATO said in a statement yesterday it has requested information from 57 banks and financial institutions and plans to use this data along with its own records to identify taxpayers who have not disclosed offshore income, or have over-claimed deductions relating to international transactions.

Tax Commissioner Michael D’Ascenzo said it will use the information, combined with its own records, to identify taxpayers who are using tax havens to minimise their bills illegally.

“Once we receive the information from the banks, we will match it against our own data to identify people who may not have met their lodgement and payment obligations under Australian tax law,” he said.

“There is nothing wrong with holding an offshore account or investing overseas as long as you pay any Australian tax due. Our aim is to identify people who may be deliberately trying to hide income or assets offshore.”

The information being sought by the ATO relates to the period between July 1, 2005 and June 30, 2009.

It has been reported the investigation is expected to uncover the records of over 100,000 people with overseas assets, and is part of a broader campaign to control violations regarding offshore accounts.

As reported by the AFR, the ATO has requested information from 57 major banks and financial institutions, including the big four banks and other institutions with branches located overseas including Citigroup, Credit Suisse, Goldman Sachs, JBWere and UBS.

But the ATO is also seeking details regarding company cars, investigating state and territory motor registration lists. Credit card and EFTPOS transactions are also expected to be investigated, while data from sharemarket registries is also being scrutinised.

However, the office is still warning offenders to come forward and make a voluntary disclosure before they are slammed with massive penalties that could see them pay fines as high as 90% of the monies earned.

D’Ascenzo referenced a voluntary disclosure program set up last December to assist those who would like to disclose unreported income or over-claimed reductions and face reduced penalties. However, the offer ends on June 30.

“People who choose not to come forward run the risk of being audited in the future, in which case the penalties would be much higher,” D’Ascenzo said.

“As we get access to more and more intelligence on offshore transactions, I urge people to come to us before we come to them.”

If you’ve earned over $20,000 from sources offshore, you will have to pay a shortfall penalty of 10%, but income under $20,000 earned offshore will not incur a penalty if you come forward voluntarily.

But when the program was announced, D’Ascenzo said penalties could be extremely high if taxpayers with undisclosed income do not come forward before audits begin after 30 June.

“There’s a much higher price to be paid later if we discover undeclared income through an audit process. Penalties can be as high as 90%, and we will seek prosecution in serious cases.”