Tax Alert // Overseas income data matching program

The ATO has received details of more than 1.6m accounts holding over $100bn of offshore assets which they will use to match against reported income in tax returns this Tax Time.

The Common Reporting Standard (CRS) allows account information to be shared across 65 countries which covers:

  • information on account holders
  • balances
  • interest and dividend payments
  • proceeds from the sale of assets, and
  • other income

This may include income from offshore investments, employment, pensions, business and consulting, or capital gains on overseas assets.

The ATO will use this information to identify taxpayers who have omitted offshore income and gains from their Australian tax returns. Whilst the ATO will use this information to target taxpayers who deliberately conceal their offshore income for penalties, they will seek to educate taxpayers who may get their tax return wrong through not understanding their obligations. The ATO are concerned that taxpayers either deliberately get it wrong or mistakenly believe that assets and income held offshore does not need to be reported on their income tax return.

Bentleys comment – if taxpayers are unsure about reporting income and gains from assets they hold offshore, or from offshore accounts they should consult with their Bentleys adviser. Australian tax residents are taxable on their worldwide income even if they have paid tax overseas, but the various Double Tax Agreements Australia has signed with overseas countries may modify the tax treatment in some cases depending on the source of the income and the tax treaty residence status of the taxpayer. If the income is subject to tax in Australia, then the taxpayer may receive a credit for the overseas tax to offset against their Australian tax liability.

If you have concerns about how you have reported your income or assets in your tax return in past years, or have earned offshore income in the 2019 tax year and are unsure of your tax obligations please contact your Bentleys adviser for help.