ATO Widens Net In Offshore Tax Scheme Investigation

by Mary Swire, Tax-News.com, Hong Kong

26 July 2005

The Australian Tax Office's investigation into offshore tax schemes has widened from an initial twelve suspects to include as many as 500 individuals, Tax Commissioner Michael Carmody has revealed.

According to the Crime Commission, which is cooperating with the ATO in the investigation, promoters of offshore tax schemes, along with participants in the schemes, are under investigation. Last month, the commission raided 85 homes in four states, issuing 48 warrants in respect of suspected tax evasion.

Information obtained by the ATO indicates that in some cases deductions are claimed for payments for expenses and services that are fictitious. In other cases, assessable income derived offshore is not brought to account in Australia, which, the tax office says, is then secretly returned to Australia disguised as a loan, an inheritance, a gift, or through credit and debit cards.

"For some time we've been trying to crack open some of these offshore schemes and the information we obtained then, and I should say since, which is a lot that's come forward since, is giving me more and more confidence that we have made significant inroads there," Carmody told national broadcaster ABC on Sunday.

"A rough estimate at the moment of that territory, it needs to be refined down further, is probably around 500 people," he stated, adding that the total amount of money involved is somewhere in the region of A$300 million (US$230 million).

Carmody revealed that 60 individuals have come forward to voluntarily disclose details of their own tax affairs, as well as to blow the whistle on others involved in offshore tax schemes.

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