We have increased our focus on international tax issues and have powers to obtain and exchange information with other tax jurisdictions.
As more Australian taxpayers conduct international dealings and hold investments overseas, we have increased our focus on international tax issues.
When gathering information from overseas during compliance activities, we generally use a cooperative approach first. We may also collect information and documents located offshore by:
- using our domestic information-gathering powers to obtain information about offshore dealings by accessing information held by entities in Australia
- issuing an offshore information notice
- an exchange of information with other jurisdictions under various arrangements.
The requirement to substantiate your returns and statements rests with you. If your records are kept offshore you are still required to provide them to us. You cannot refuse to provide records we require under a notice simply because your returns or advice were prepared outside Australia.
Although we have specific powers to gather information and documents from offshore jurisdictions, we can also use our domestic notice and access powers in certain situations.
We can use our domestic notice powers if an entity in Australia has custody or control of documents located offshore. These powers require the entity in Australia to obtain the documents from offshore and give them to us.
The following examples explain our approach to gathering information where an entity in Australia has custody or control of documents located offshore.
Example – Custody and control of offshore documents
Australia Bank Ltd is a bank listed on the Australian Securities Exchange. The bank operates a business in Australia and has central management and control situated in Australia. Australia Bank Ltd has a branch in New York City.
Australia Bank Ltd has custody and control of the documents and information in respect of the branch located in New York – this is because a branch located offshore is not a separate legal entity.End of example
Example – Control of offshore documents
Harrinder is an Australian resident taxpayer living in Sydney. Harrinder has a safe deposit box with a bank in Liechtenstein, where she keeps financial statements and documents in respect of her offshore assets.
In this situation, the safe deposit box is under the control of Harrinder. She can obtain the contents of the box by making a request to the bank. We can issue a formal notice to Harrinder requiring details of the contents of the safe deposit box.End of example
Example – Control of information about foreign bank accounts
We issue a notice under section 353-10 of Schedule 1 to the TAA 1953 to a bank in Australia requiring details of foreign bank accounts held in the bank’s digital database in Australia.
The bank must comply as the notice was issued for the proper purpose of ascertaining whether persons may have an Australian tax liability. The notice is not limited to information directly relating to Australian taxpayers.End of example
The example above relating to control of information about foreign bank accounts is based on the decision in Australia and New Zealand Banking Group Limited v. Konza & Anor  FCAFC 127.
In recent years, we have increased the number of information requests made to banks in order to help identify undisclosed foreign-sourced income evident in bank transactions.
The validity of our formal notices is not inhibited by any foreign law that purports to prohibit the disclosure of information in Australia to us, provided the notice is issued for the purposes of the tax laws.
If we believe that the information or documents we need about your tax affairs are located outside Australia, we can issue you with an offshore information notice.
We may issue you with an offshore information notice for any information or document that we reasonably believe is:
- relevant to the assessment of a tax-related liability of yours
- 'offshore information' or an 'offshore document'
'Offshore information' is any information that is:
- within the knowledge (whether exclusive or otherwise) of an entity outside Australia;
- recorded (whether exclusively or otherwise) in a document outside Australia;
- stored (whether exclusively or otherwise) by any means whatsoever outside Australia.
An 'offshore document' is any document that is outside Australia (whether or not copies are in Australia or, if the documents are copies of other documents, whether or not those other documents are in Australia).
An offshore information notice will request you to:
- give us the relevant information
- produce the relevant documents
- make copies of the relevant documents and produce those copies.
Although we are not required to specify a period to which our request relates to in these notices, we will generally provide you with these dates.
The information we request in the notice does not need to be in your custody or under your control. There are no penalties or criminal sanctions for non-compliance with an offshore information notice. However, if you refuse or fail to give us the information or documents requested in the notice, then that information or those documents (or secondary evidence of the documents) are inadmissible in any court or tribunal proceedings relating to a tax-related liability of yours, unless we consent to it.
You can challenge our decision to issue an offshore information notice under the Administrative Decisions (Judicial Review) Act 1977.
Form of an offshore notice
An offshore information notice we issue must be in writing and include:
- the legislative provision under which it is issued
- your name
- your address for service
- the date of issue
- details of the assessment of a tax-related liability of yours to which the information and documents are relevant
- information to be given, the documents to be produced and the documents to be copied and produced
- details on how to comply with the notice, including
- the time you have to comply
- names of our contact officers
- the address to which the information, documents and copies are to be sent
- any other requirement as to the manner in which compliance is required
- the consequences of not complying.
Time given to comply
We give you at least 90 days to comply with an offshore information notice. You can download the approved form Request for extension of time to comply with an offshore information notice (PDF, 242KB)This link will download a file for an extension of time to comply with the notice. That application must be received by us prior to the expiry of the period stated in the notice. We will consider your application and provide you with a response in writing.
The exchange of information with other jurisdictions improves tax administrative practices worldwide. Mechanisms used to exchange tax information with other jurisdictions include:
- exchange of information articles included in our double tax agreements
- tax information exchange agreements.
Exchange of information is limited to jurisdictions that have an agreement with Australia. The exchange is dependent on the cooperation of their tax administrations to collect information, and in some cases there may be restrictions on how we use the information and documents received from them.
Information can be requested by us or may be given by the foreign authority on its own initiative. Before requesting information from another jurisdiction, we consider whether the information is either:
- held within Australia, or is in the custody or control of someone within Australia, and may be accessible using our domestic access powers
- able to be obtained using an offshore information notice.
We generally make requests for information from foreign tax authorities where:
- we have been unable to obtain information or documents from you or third parties in Australia
- we suspect you or your representative has failed to disclose offshore income or assets to us
- we require bulk data to confirm foreign-sourced income is being returned by Australian taxpayers.
Australia is also a party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The convention is a freestanding agreement designed to promote international cooperation. It provides for:
- the exchange of information
- the service of documents
- other forms of cooperation including joint audits
- assistance in collection of outstanding tax liabilities.
Some tax treaty articles and multilateral conventions also facilitate international debt recovery and use a cooperative approach to collection.
Cross-border transactions within the global economy create the potential for tax risks across tax administrations, including Australia's.
Our participation in the Joint International Tax Shelter Information Centre is a key part of our overall strategy to deal with aggressive tax planning. The centre plays an important role in the detection of abusive tax schemes and identifying those who promote and invest in them. Our membership increases our intelligence on abusive tax schemes and helps us deal with those schemes.
We also work with the Organisation for Economic Cooperation and Development (fiscal affairs working party) on tax evasion matters to address the economic, social and governance challenges of globalisation.