ATO initiative: “Project DO IT”
- 15 October 2014
The ATO initiative known as "Project DO IT: disclose offshore income today" is an amnesty which allows eligible taxpayers to come forward and voluntarily disclose unreported foreign income and assets.
The Commissioner of Taxation has urged taxpayers with offshore assets to declare their interests ahead of a global crackdown on people using international tax havens.
What does Project DO IT cover?
Specifically, the initiative covers amounts not 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 incorrectly
- capital gains in respect of foreign assets or Australian assets transferred offshore, and
- income from an offshore entity that is taxable in the taxpayer’s hands.
The benefits of participating in Project DO IT
Under the initiative, the ATO is providing a number of benefits to those who are accepted. Specifically, the Commissioner states that people disclosing their offshore assets will:
- only be assessed for applicable periods of review (generally only the last 4 years)
- be liable for a shortfall penalty of 10% (it could otherwise be as high as 90%)
- be liable for full shortfall interest charges
- not be entitled to utilise any losses that arose in years for which they are not being assessed
- be able to seek assurance regarding the Tax Office's tax treatment of repatriated offshore assets
- be able to enter into a settlement deed to obtain additional certainty, and
- not be investigated or referred for criminal investigation by the Tax Office on the basis of their disclosures.
Additionally, if taxpayers have offshore structures that they wish to wind up, or offshore assets they wish to transfer to Australian entities, the ATO can provide assurance and certainty as to the tax effects in line with this initiative.
Who should participate in Project DO IT?
All taxpayers (whether that be individuals, companies, partnerships, trusts, etc.) are eligible to make a disclosure under this initiative as long as they are not specifically excluded from doing so.
Who is not eligible to participate in Project DO IT?
Not all taxpayers are eligible to participate in Project DO IT. In particular a taxpayer will not be eligible to participate in the amnesty if:
- the ATO is already auditing the taxpayer in relation to omitted offshore income or capital gains or over-claimed deductions that are intended to be disclosed
- the taxpayer has received a compulsory information-gathering notice from the ATO requiring them to produce information (or attend and give evidence) relating to the offshore income or capital gains or over-claimed deductions that are intended to be disclosed
- the entity has been involved in promoting or marketing tax evasion schemes
- the taxpayer is already under criminal investigation concerning tax-related criminal offences or has been previously convicted
- the taxpayer’s foreign assets or income was derived from serious criminal offences unrelated to tax, and
- the taxpayer has not complied with specific obligations from a previous offshore voluntary disclosure initiative that they were involved in.
What taxpayers need to do?
To receive the benefits of Project DO IT, taxpayers must make a truthful disclosure to the ATO.
Taxpayers should complete all the questions and lodge their disclosure statement with the ATO before 19 December 2014 (or seek an extension).
Until the taxpayer lodges the disclosure statement, normal compliance activities will continue by the ATO and if the taxpayer is detected first they will not be able to participate.
Should you wish to make any disclosures for Project Do It please contact our office before doing so to ensure that your disclosures are within the amnesty guidelines.