As previously foreshadowed, the ATO announced this project on 27
March 2014 as an initiative to allow taxpayers to come forward and
voluntarily disclose unreported foreign income and assets and face
reduced scrutiny and penalties.
If you lodge Australian tax returns or have clients who lodge
Australian tax returns, you need to be aware of Project DO IT
(Disclose Offshore Income Today).
The majority of press coverage for Project DO IT is concerning
taxpayers who have sheltered assets and income in offshore tax
havens. However, you may also have clients who inherited money many
years ago and it has been left in their previous home country or
where the deceased resided and has subesquently never been
disclosed as part of worldwide income in Australia.
Does it apply to you?
All individuals, companies, corporate limited partnerships,
partnerships and trusts (including superannuation funds and
executors or administrators of deceased estates) are eligible to
participate in this initiative unless specific exclusions apply to
What it is intended to do?
Project DO IT is intended to provide Australian taxpayers with
an opportunity to declare previously unreported offshore financial
activities before the ATO detects the activities.
The initiative covers amounts not previously reported or
incorrectly reported in tax returns, including:
foreign income or a transaction with an offshore structure
deductions relating to foreign income that have been claimed
capital gains in respect of foreign assets or Australian assets
income from an offshore entity that is taxable in your
How is this different to prior initiatives?
Project DO IT differs from past initiatives in several respects.
If the ATO accepts the disclosure under this initiative:
Taxpayers will only be assessed for the years where the time
limit for amending the return has not yet expired (generally four
years from lodging) – so a 20 year problem can be converted
into a 4 year issue
The information will only be used for the purposes of
calculating tax shortfalls
The ATO will not form an opinion on previous fraud or
The ATO will not investigate the disclosure for the purpose of
The ATO will not voluntarily provide the information to other
law enforcement agencies
The ATO will cap the tax shortfall penalty at only 10% (or
remit in full)
The ATO will work with taxpayers who wish to wind up offshore
structures and bring capital to Australia.
What you need to do
Assessing risk and unwinding existing arrangements takes time.
We suggest you start reviewing your Australian tax returns and
financial affairs now.
You have until 19 December 2014 to make the disclosure. If you
need time to organise your records, you have the option of lodging
an 'expression of interest' to participate in the
What happens if you don't do anything?
The ATO now exchanges information with over 100 jurisdictions
and 'tax havens' are actively participating in this
program. If the ATO detects your activities before you make the
disclosure, the ATO has confirmed that it will use the full force
of the law and as a consequence you may be subject to severe
financial penalties (up to 90% of the shortfall tax) and potential
How can we help?
With significant experience in this space, our team of
specialists at Moore Stephens can assist with the review of your
Australian tax position and provide advice as to how the disclosure
regime could benefit you. If there is a need to declare previously
unreported offshore financial activities, we can advise, guide and
assist with completing the disclosure statement together with
planning a suitable structure on repatriating funds.
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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