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The Weekend Neos Kosmos : 9 April 2016
NEWS 2 THE WEEKEND NEOS KOSMOS | SATURDAY 9 APRIL 2016 How will the ‘Panama Leaks’ affect the Australian resident taxpayer? There are no clear-cut guidelines as to how the ATO will tackle the issues with respect to criminal prosecution for non-disclosure of foreign-sourced income in relation to the Panama Papers TONY ANAMOURLIS With increasing fiscal leakage due to tax evasion, the OECD, of which Australia and Greece are member states, has in recent years been very focused on a global strategy to reduce the incidence of tax evasion and restore government revenue by preventing fiscal leakage. In particular, the OECD's work in developing the ‘Global Forum on Transparency and Exchange of Information’, in conjunction with their work on base erosion and profit shifting reflects a global attempt to bring the rules of international tax into the 21st century. In this respect the OECD (incl. Australia and Greece) are desperately looking for ways to boost revenue by changing the anachronistic infrastructure of the international tax system (largely created between the 1st and 2nd world wars) as those rules largely catered for a physical world completely irrelevant to todays global digital economy. Part of this also includes boosting information sharing and data matching systems to ensure residents in wealthy countries contribute appropriately to the lives they enjoy in that jurisdiction and it will be increasingly difficult to evade tax and there will be increasingly harsh penalties for doing so. It has now become apparent that in relation to documents obtained by the ATO via an exchange of infor- mation requests in relation to the ‘Panama Leaks’, the ATO has flagged that it has received a considerable amount of data concerning a Panamanian law firm that contained the names of a significant number of Australian taxpayer residents. The ATO has identified more than 800 taxpayers, linking 120 of them to an “associate offshore service provider” located in Hong Kong. By way of background, the leaked data covers almost 40 years, from 1977 and ending in 2015. It contains a never-seen-before overview of how the offshore world operates, providing a look at how money flows from the world's financial systems to tax havens, cracking our national treasures relating to our tax revenue. The data includes emails, spreadsheets, passports and company records connected to people in more than 200 countries and territories. It has been reported that a full list of taxpayers will be released in early May. To explain the Panama Papers scandal and how it can affect the tax-paying Australian resident, we need to take a look back at 2014 in relation to the Project DO IT. Project DO IT offered the most substantial terms ever publicised by the ATO since the last foreign income amnesty came into play back in 2010 for making a voluntary tax disclosure. Moving on to 2014, the key points to Pro- ject DO IT were: • Tax was only assessed for the past four assessment years, regardless of the number of years of non-disclosure; • Penalties of 10 per cent, or nil if additional income in a year was $20,000 or less; • The ATO would not refer you for investigation for criminal prosecutions; • The ATO would not voluntarily refer the disclosure to another law enforcement agency; • Guarantee and certainty was given on the tax effects of winding up offshore structures and bringing offshore assets back to Australia; • Only certain financial information was to be provided and; • There was efficient disclosure processes with no compulsion to meet the ATO. What happened if you didn't disclose your offshore income, offshore assets and offshore bank account and you are detected after 19 December 2014? Given the amount of publicity both nationally and internationally, and the need for the Commonwealth of Australia to protect its revenue, the ATO has firmly focused on the distinction between tax avoidance and tax evasion. Project Wickenby was a response to a change in dynamics out of which came Operation Wickenby, which centred on high-profile tax cases and high net wealth individuals with successful civil and criminal prosecutions. Frequently taxpayers are detected through any number of processes including a simple request, query, field audit, review or business review, investigation or audit. In these circumstances, NEOS KOSMOS Published since 1957 Published by Ethnic Publications Pty Ltd (ABN: 13005 255 087) of 169 Burwood Rd, Hawthorn, Victoria 3122. Printed by Rural Press Printing, Ballarat. No. 5716 Contacts Reception Phone: (03) 9482 4433 Fax: (03) 9482 2962 Email: email@example.com Phone: (03) 9482 4433 Email: firstname.lastname@example.org Web: www.neoskosmos.com Advertising letters Email: email@example.com NEOS KOSMOS - English Publisher: Address: Level 1, 169 Burwood Road, Hawthorn, Victoria 3122 Mail: PO Box 6068 Hawthorn West, Victoria 3122 Subscriptions Phone: (03) 9482 4433 Email: firstname.lastname@example.org Fax: (03) 9482 2962 Letters should not be more than 200 words and they must indicate your full name, address and a day time telephone number for verification. By submitting your letter to us for publication you agree that we may edit the letter for legal, space or other reasons and may, after the publication in the paper, republish it on the internet or in other media. Christopher Gogos Editor-in-chief: Sotiris Hatzimanolis Editorial director: Nelly Skoufatoglou Journalists: Anastasia Tsirtsakis, Panos Apostolou, Nikos Fotakis, George Stogiannou Contributors: Dean Kalimniou, Billy Cotsis, Theodora Maios, Tony Anamourlis, Anthony Stavrinos, Heidi Serafimidou Sub-editor: Angela Costanzo Graphic design: Peter Kelidis for taxpayers who had become aware that their tax affairs were not compliant and they needed to make a voluntary disclosure, there is absolutely no doubt that their level of tax noncompliance will eventually be detected and if so, they run a real risk of being prosecuted and incarcerated for substantial periods of time depending upon the nature of the offences committed. Accordingly, what the ATO is targeting amongst other things is, for example, conspicuous consumption, low salaries, substantial assets, glamorous cars, luxurious holidays, expensive homes, children at elite private schools and sig- DIGITAL.NEOSKOSMOS.COM Distant view of Mossack Fonseca, based in Panama. PHOTO: EPA/ALEJANDRO BOLIVAR.
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