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Tax Advice

Tax nightmares? Voluntary disclosure is the answer

  • Having nightmares about your tax?
  • Haven’t lodged income tax returns for don’t know how  many years?
  • Want to get back on track but don’t know how?
  • Afraid to open a letter from the Australian Taxation Office (ATO)?
  • Tax debt just getting bigger and bigger?

Then making a voluntary disclosure will solve your tax problems (and let you sleep easy at night).

And it doesn’t matter if you can’t find your receipts etc. The ATO can assist in trying to figure out how much income you derived in a particular year. For instance, with your assistance they can do what is called an asset betterment test to see if your assets far outweigh your income.

We have had several fantastic results for our clients.  For instance:

  • Due to health issues and not wanting to confront his tax obligations, our client hadn’t lodged for twenty years. Very few tax records existed.  After painstaking analysis, the ATO concluded that the tax owing was over $3 million.  BUT, due to the taxpayer’s voluntary disclosure, no penalties were imposed and only minimal interest was paid.  Thus, the $3 million tax bill was reduced to $1.1 million.  This was an amount that the taxpayer was able to pay.  He is now able to move forward with his life and is very very relieved.

 

  • A Chinese couple were being heavily audited – and he and his wife had not declared income. In addition they had received approximately $500,000 from their parents in China which the ATO intended to treat as income.  With our assistance the clients made a full disclosure of undeclared income.  We were able to prove that all the monies had come from their parents and thus this was not treated as income.  Thus, we were able to reduce a potential tax bill of $400,000 to $125,000.  And, the big bonus is that because the client made a full voluntary disclosure, he saved $51,000 in penalties.

This was a significant victory for our Chinese clients, particularly as they made the voluntary disclosure after the audit had commenced.  What assisted them in this particular case was the forensic accounting that we were able to undertake to show how all the monies flowed.  We also established an excellent rapport with the ATO case officers.

 

Message:  Engage early.  You will be amazed at how helpful the ATO is if you engage with them before they start auditing.

Once the ATO starts auditing you are facing massive penalties.  It is possible to overcome the large penalties by engaging a lawyer to try represent you to try to minimise penalties and outcomes.  However it makes the lawyers’ task much more difficult.

 

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