Haven't disclosed foreign income in your tax returns?
If you have received income from overseas or have been holding monies overseas and receiving interest income and haven’t disclosed this in your tax returns do it now before you are audited and face severe penalties.
This is because, as a result of the new Common Reporting Systems (“CRS”) the ATO will become aware of this foreign income in the very near future and take appropriate action such as auditing you.
So, if you haven’t lodged and income tax return showing these monies, you should do so now by making a voluntary disclosure. This will reduce the severity of any penalty for failing to disclose. The ATO is generally very sympathetic to taxpayers who make a voluntary disclosure.
How far back do I have to go?
Generally, the time limit for review of income tax returns for individuals and small business taxpayers is 2 years from the last time you lodged. So, if you lodged for the 2017 income year, the ATO can only audit you for the 2016 and 2017. This is provided the ATO does not suspect fraud or evasion by you.
However, if you derive foreign income the ATO has the power to amend your tax assessment within 4 years after the day you receive you notice of the assessment (tax bill).
So, if you lodged your tax return for 2017 say on 1 November 2017, your 4 year-amendment period starts 2 November 2017, you must make a voluntary disclosure for income years 2014, 2014, 2016 and 2017.
Don’t be complacent and wait for the ATO to contact you about foreign income, be proactive and contact Waterhouse Lawyers so we can advise you on the best way to disclose this income, before it is too late.