Tax havens and tax administration

Arrangements we are concerned about

Concealment is our main concern - in particular, those schemes and arrangements that use secrecy laws to conceal assets and income that are subject to tax in Australia.

In the simplest case of concealment, a taxpayer may seek to conceal assets and income by setting up a bank account in a tax haven. As the tax haven does not have an agreement to exchange information with Australia, or the country has a strict bank secrecy regime, we cannot directly obtain detailed information about the offshore bank account.

In more complex cases, taxpayers may use an 'international promoter' to set up and manage offshore trusts or companies that seek to conceal the taxpayer's beneficial ownership of assets. The most common form of tax haven structure used to conceal ownership is the 'international business company'. In these cases, the international promoter may interpose trusts or companies as the shareholders, using their own companies as trustees or nominees. The directors of the offshore company may also be companies associated with the international promoter. Arrangements are put in place to ensure that the Australian taxpayer is still able to influence or control the offshore trust or company.

These complex arrangements aim to conceal the true ownership of assets and so avoid declaring any offshore income or gains in relevant tax returns.

Australians who use these arrangements leave other Australians to bear a greater tax burden. These arrangements erode community confidence in Australia's tax system.

Sections within Tax havens in context

• What is a tax haven?
• Extent of tax haven use
• The law in Australia
• Lawful use of tax havens
• Arrangements we are concerned about
• What we are seeing and doing