All residents of Australia are required to declare all the income that they earn including foreign income. The ATO is on the lookout for people who have been trying to hide foreign income so as to avoid taxation. If you get income from overseas in the form of investments, employment income, or from relatives, you should declare it. Did you know that the Australian Taxation Office has the right to keep track of money worldwide? This has been provided by the new international data sharing agreements. With this, the taxman will keep an eye on individuals who are not meeting this obligation.
You are required to declare your foreign income if:
- You have acquired some form of assets that are generating income and are based overseas.
- You have moved to Australia but have left assets or other sources of income in your country of departure.
- You are an employee of an overseas company or employer.
The type of foreign income that you need to declare includes:
- Foreign pensions
- Interest from offshore accounts
- Property income
- Capital gains
- Overseas employment income
Can the ATO Access My Income Information?
The government has put measures in place and is cracking the whip on anyone that does not declare foreign income. If you are wondering how the ATO gets such information, it is through electronic data which is shared by banks and foreign tax authorities. The taxman monitors how funds are moving in and out of the country and as such, it would be futile to try and hide. All the information that the ATO collects is matched with the tax returns that have been lodged and this may land you in trouble if the information does not match.
To curb such vices, the government has introduced stiff penalties and fines for failing to declare foreign income in your tax. The penalties are between 25% and 95% of the tax that has been evaded. There will also be an interest of more than 9% charged on the tax that has not been paid. If you have received the money in foreign currency, you will be required to convert it to Australian dollars for tax purposes. There are instances where you may have paid tax in the source country of the income. In such cases, you will declare the foreign income and make claims so as to avoid double taxation.
Whereas there are a few individuals that will try to hide foreign income so as to avoid taxes, there are so many who are not even sure how to go about it. If you are not sure about the process of declaring foreign income, you can always contact the ATO or qualified tax agents like Accurate Business & Accounting Services for guidance and assistance.
Get Your Tax Issues in Order
With the ATO showing commitment to providing all the necessary help to those with foreign incomes, you will not have any excuse for not lodging your taxes. If you have any foreign income, it is in your best interest that you make a declaration of the same. This may be a complicated matter and to avoid confusion, it is best to get help from registered tax agents. Do not make assumptions that the ATO will not find out about your undeclared foreign income. It is better to be safe than sorry.
Book an Appointment
If you would love to know more about foreign income and the relevant taxation issues, contact us and book an appointment. Accurate Business & Accounting Services will go out of its way to help you and ensure that you are fully compliant with all tax laws and regulations.