If you have received income from overseas or have been holding monies overseas and receiving interest income but 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 Australian Tax Office (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 an 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.
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 2016 and 2017. This is provided the ATO does not suspect that there has been any 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, then your 4 year-amendment period starts 2 November 2017. You must make a voluntary disclosure for income years 2014, 2014, 2016 and 2017.
Do not be complacent and wait for the ATO to contact you about foreign income, be proactive and contact Waterhouse Lawyers so that we can advise you on the best way to disclose this foreign income, before it is too late.