The Australian Taxation Office is increasingly relying on social networking sites, including Facebook and MySpace, to piece together prima facie cases against investors using offshore havens for tax evasion, an expert has claimed.
It comes as a period of amnesty is still underway for tax payers involved in offshore-haven activity, with the ATO saying it is willing to work with individuals who are prepared to come forward voluntarily.
Tax expert Tony Anamourlis, a lecturer at Latrobe University’s faculty of Law and Management, says the ATO has ramped up its audits on investors using offshore havens after the release of an OECD report earlier this year on high-net wealth individuals.
He said the ATO has had trouble in obtaining information from Swiss bank UBS regarding investor information, and that it is ramping up its own efforts – specifically on social networks.
Other sources for information include sites such as Google, YouTube and Centrelink. Anamourlis says searches on these sites will become more popular and commonplace within an ATO as it builds up profiles of wealthy individuals.
“These social networks are just one of the methods through which they build up profiles, and not necessarily on well-known individuals, but through mum-and-dad types. But usually they’re searching for high-net wealth tax payers.”
“It is an accurate way of finding information. Just use Google on me and you’ll find a number of things in there, jump on YouTube and there could be things related to me. They cross-reference all of this, but it’s just adding to the ways they get information.”
The ramp-up comes as Facebook has recently upped its security controls for users, with members now able to control every aspect of their profile and determine whether their private information is available publically or only to online friends.
“They might want to make use of those controls if they are concerned. Even with tax information exchange agreements coming into play, there are still weaknesses from getting information overseas so the ATO will build up profiles using these sites.”
Anamourlis says investors involved with offshore havens should come forward and take advantage of the ATO’s amnesty offer, available until June 30.
“If taxpayers have an appetite for aggressive tax planning and or have in the past entered into aggressive tax planning using offshore entities, then it’s a good idea now to make an unprompted voluntary disclosure, which will, depending on your circumstances, reduce the exposure of being criminally prosecuted and also reduce the penalties imposed.”
“In circumstances where you are found to be tax non-compliant the matter can be referred to the Commonwealth Director of Public Prosecutions for action.”
Tax commissioner Michael D’Ascenzo announced the amnesty last year. If you’ve earned over $20,000 from offshore sources, you’ll have to pay shortfall penalties of 10%, but any earnings under $20,000 will not incur a penalty.
“This new offer provides a good opportunity for people who want to do the right thing to get their tax affairs in order,” D’Ascenzo said in a statement at the time.
“People can now approach us anonymously for an indication of whether we would initiate an investigation to determine whether there is a potential breach of the criminal law. In making this decision, we will often seek advice from an appropriately qualified panel which will include external members.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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