Australia has recently signed a joint declaration with Switzerland to increase cooperation between the two countries to build closer ties and tackle tax evasion. The declaration is another step towards greater tax transparency and supports the ATO’s push for all jurisdictions to receive the right amount of tax.
Under the declaration, Australia and Switzerland have committed to the reciprocal automatic exchange of financial data, starting in 2018. This will include investment income and balances held by the other country, which will be used to check against income declared in tax returns.
This is a step toward aligning both countries’ commitment to implement the OECD’s Common Reporting Standard (CRS) on automatic exchange of information by 2018. Exchanging information with other jurisdictions allows the ATO to complete taxpayer profiles to determine whether they have fully and accurately disclosed their income.
Although a tax treaty with Switzerland may only affect those wealthy, larger corporate taxpayers, it is a sign of the times going forward. Late last year, the ATO released Project DO IT. This stood for “Disclose Offshore Income Today.” It was an initiative to allow taxpayers to declare, previously undisclosed, overseas income and assets without penalty.
Australia currently has over 100 treaties and international agreements with jurisdictions around the world. In the last two years over 1,500 information exchanges have helped raise an extra $700 million in tax liabilities.
Collaborating internationally contributes significantly to avoiding double taxation or double non-taxation and assists to minimise corporate tax erosion, profit shifting and offshore tax evasion.
Please review your tax obligations especially if you have interests in property or investments overseas. Call your accountant at Optima Partners if you require assistance.
Enrico De Pietro
Director, Optima Partners