The managing director of Surrey-based advisory firm Montfort International said a new tax initiative from the Australian Taxation Office (ATO), dubbed Project Do It, would target previously unreported offshore financial activities of all people eligible to pay tax in Australia.
The initiative’s core principle is an amnesty for taxpayers to voluntarily disclose unreported foreign income and assets.
Under the conditions of the amnesty, which expires in December, anyone who discloses their assets will only be liable for four years and a maximum of 10 per cent on any tax owed.
A statement by the ATO warned: “The net is closing in on tax evaders around the world. If you need to disclose international financial activities, act quickly and decisively. If we detect you first you will be exposed to the full force of the law, including severe penalties.”
Mr Davies said: “Many migrants and returning nationals, in addition to many advisers, could get caught up in this issue because of a lack of awareness of what is in range.
“It seems that any asset or income held outside Australia in the ATO’s line of sight. Anything from undeclared UK pensions, qualifying recognised overseas pension schemes, and qualifying non-UK pension schemes, in addition to Isas, share portfolios and even inheritances kept out of Australia, will be considered.”
Warnings over tighter tax regulations in Australia were echoed by Paul Nixon, investment manager at London-based firm Vestra Wealth, who said the US Foreign Accounting and Tax Compliance Act would also catch individuals and their advisers off-guard.
He warned that Fatca, which takes effect in July, would open up significant US tax liabilities to thousands of “accidental Americans”, or UK citizens who have green cards – even if they have returned to the UK.
UK financial institutions are obliged to report those liable to the US Internal Revenue Service. Mr Nixon said a 30 per cent withholding tax would be imposed on anyone liable.
He added: “The holder of a US green card has the same US filing requirement as a US citizen, and green card holders retain an obligation to file US returns until it is physically handed back.
“With thousands of UK citizens obtaining US Green cards each year this misunderstanding could potentially be very costly, especially as once the Green card has been held for eight years the process of relinquishing it is the same as that of a US Citizen relinquishing their passport.”
