All Australian residents who receive overseas income, or non-residents receiving Australian income, ought to ensure that they report such income to the local tax authorities to avoid stiff penalties. The Common Reporting Standard (CRS) legislation that sets the bar for foreign tax residents regarding the exchange, collection and reporting of financial account information came into effect on 1 July 2017.
The first report though is due to the ATO on the 31st of July 2018 and will report on data covering 6 months from the 1st of July 2017 to the 31st of December 2017. Since August 2017, Australia has implemented exchange agreements with 51 overseas jurisdictions including many low or no tax jurisdictions such Liechtenstein, Isle of Man and Luxembourg.
As the CRS provides the ATO with a powerful data matching tool, Australian resident taxpayers ought to ensure that details provided to any foreign financial institutions are accurate and kept up-to-date. All overseas income should be declared in income tax returns to avoid possible penalties and interest.
Incorrect or misleading statements may give rise to a penalty of between 25% and 75% of the amount of the underpaid tax, depending on the gravity or seriousness of the non-disclosure. This comes as the ATO looks to tighten its grip on tax evasion and implement a broader suite of international transparency measures.
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