Offshore tax evasion
Generally, Australian residents (for tax purposes) are taxed on their worldwide income. Offshore tax evasion occurs when a person evades paying tax by either holding their money and assets offshore or by not declaring their offshore income.
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Offshore tax evasion explained
Most offshore dealings are legitimate and comply with Australian tax laws. But some people try to exploit secrecy provisions in other countries to evade paying tax in Australia.
Offshore tax evasion is a form of financial crime, and like all financial crimes, is diverse in nature, scale and the amount of harm it causes. It is often structured in ways that combine legal and illegal transactions. Those involved often combine both types of payments in the hope of making it more difficult for us to unravel the full extent of their activities.
Unluckily for them, we are equipped with the resources, sophisticated data matching and analytics capability, and intelligence sharing relationships to uncover even the most elaborate offshore dealings.
Offshore tax evasion results in less tax revenue which means less funding for essential community services like health and education.
How we tackle offshore tax evasion
In Australia, the ATO-led Serious Financial Crime Taskforce (SFCT) tackles offshore tax evasion. The SFCT is a multi-agency taskforce that works together using our combined knowledge, resources and experience to track non-compliance and bring offshore tax evaders to justice.
We also work with governments and organisations around the world to fight tax crime on a global scale. One example of our global cooperation is through the Joint Chiefs of Global Tax Enforcement (J5).
The J5 is a strong international alliance that leads the fight against transnational tax crime and money laundering, including cryptocurrency threats and those who undertake, enable or facilitate global tax evasion.
In addition, Australia has a network of international treaties and information exchange agreements with over 100 jurisdictions, allowing us to obtain information about suspected tax evasion. We also regularly receive information from informants and third parties.
Not only does this information help us identify those who are involved in offshore tax evasion, but it also helps us to identify enablers including tax professionals, lawyers and financial advisors who promote or facilitate offshore tax evasion arrangements. Where appropriate, we use the Commissioner of Taxation's formal access and information gathering powers to obtain information about their clients.
The sheer volume of information we have available, and will continue to build on through our relationships with key partners, should send a clear message to those who believe their offshore evasion activities are secure and beyond our reach – they are not.
Consequences of offshore tax evasion
Those who take part in offshore tax evasion do so to the detriment of the Australian community. This is something we will not tolerate; we will catch offshore tax evaders and hold them to account.
Our national and global cooperation is reducing tax evasion in the Australian tax system. Our international partners are also reporting similar results.
Offshore tax evasion is a global problem that we are addressing through global solutions. It's clear that our efforts to tackle offshore tax evasion are paying off and that our strong partnerships will enable us to uncover even the most elaborate offshore tax evasion schemes.
For those who choose to ignore the warnings and our successes, the risks of getting caught are becoming greater. In recent years over 2,500 exchanges of information have occurred which have enabled us to raise tax liabilities of $1 billion.
If you think you might be involved in offshore tax evasion, we encourage you to come forward sooner rather than later. Making a voluntary disclosure can lead to reductions in penalties and interest, particularly if it is made before we notify you of an audit.
Find out how we are closing the net on offshore tax evasion (PDF, 888KB)This link will download a file – also available in text (HTML) format.
Most offshore dealings are legitimate, but some people evade paying tax by holding their money and assets offshore or not declaring their offshore income.