All residents of Australia are required to report all income
they earn, including foreign income. The ATO is looking for people who are
trying to hide foreign income in order to avoid taxes. If you receive income
from abroad in the form of investments, income from work or from family
members, you must declare this. Did you know that the Australian tax
authorities have the right to keep track of money worldwide? This has been made
possible by the new international data sharing agreements. With this, the tax
authorities keep an eye on persons who do not meet this obligation.
You must declare your foreign income if:
You have acquired some form of income generating assets that are located abroad.
You moved to Australia but left assets or other sources of income in your country of departure.
You are an employee of a foreign company or employer.
The type of foreign income to declare includes:
Interest from offshore accounts
Overseas labor income
Does the ATO have access to my income information?
The government has taken measures and is cracking down on anyone who does not declare foreign income. If you are wondering how the ATO gets such information, it is through electronic data shared by banks and foreign tax authorities. The tax authorities keep an eye on how funds enter and leave the country and as such it would be pointless to try to hide. Any information the ATO collects is matched against the tax returns that are filed, and this can put you in trouble if the information doesn't match.
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To curb such vices, the government has introduced severe penalties and fines for failing to declare foreign income in your taxes. The fines amount to between 25% and 95% of the tax evaded. An interest of more than 9% is also charged on the unpaid tax. If you received the money in a foreign currency, you must convert it into Australian dollars for tax purposes. There are cases where you may have paid tax in the source country of the income. In that case, you declare the foreign income and make claims to avoid double taxation.
While there are a few individuals who try to hide foreign income to avoid taxes, there are so many who are not even sure how to go about it. If you are unsure about the process of reporting foreign income, you can always contact the ATO or qualified tax advisers such as Numbers Profor guidance and assistance.
Get your tax issues in order
With the ATO committed to providing all necessary assistance to those with foreign income, you will have no excuse for not paying your taxes. If you have a foreign income, it is in your own interest that you file this tax return. This can be a complex matter and to avoid confusion it is best to seek the assistance of registered tax advisers. Do not assume that the ATO will not learn about your undeclared foreign income. Better to be safe than sorry.
Make an appointment
If you would like to know more about foreign income and relevant tax issues, please contact us and make an appointment. Numbers Pro are committed to assisting you and ensuring that you are fully compliant with all tax laws and regulations.