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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.

 

Banks singled out in drive to track down offshore tax cheats

Banks will soon be asked to dob in Australians using offshore tax-haven accounts in the latest Tax Office strategy to control the growing challenge of overseas tax evasion.

Australians operating through Vanuatu will be under the greatest scrutiny because it has been identified as the most popular tax evading destination. "We've actually profiled a number of tax havens, and Vanuatu has come out as by far the highest risk," said Michael D'Ascenzo, in his first newspaper interviews since becoming Tax Commissioner in January.

Mr D'Ascenzo said Vanuatu was popular because of its "opaque" banking system and because it was the closest haven to Australia.

Tax Office monitoring of magazine and newspaper advertising showed the number of promoters selling tax-haven services to Australia had grown to about 100, he said. That figure did not include promoters who advertised over the internet.

The plan to require banks to hand over offshore account details is modelled on a successful Irish program that flushed out billions of dollars in evaded taxes from Channel Islands banks.

Mr D'Ascenzo was likely to write to banks when resources were freed from other intensive tax-haven projects, including a credit card trawling program and Project Wickenby, which has been linked to entertainer Paul Hogan and other identities,

Mr D'Ascenzo said he was monitoring the global rise of private equity funds and the potential tax risks they posed.

"That to me is an emerging risk in the international dimensions of our landscape … but it hasn't started to bite us," he said.

"They don't have the governance and transparency of corporate structures, so they're opaque," he said.

"They work on high gearing, so there's always a high interest item in terms of the deductions; they acquire assets internationally, they sell off assets so there's capital gains issues, and sometimes they have links to tax havens," he said.

Mr D'Ascenzo returned on Sunday from a special OECD tax-haven meeting in Seoul, which concluded that "international non-compliance is a significant and growing problem".

The world's top tax administrators blamed the rise of electronic commerce and the involvement of tax lawyers, accountants and other advisers.

Mr D'Ascenzo, however, is confident that Australia is better placed than almost any other country to combat the growing global problem.

He credits Australia's pioneering AUSTRAC system for monitoring offshore money flows, as well as catch-all anti-avoidance provisions. More recently, the high-profile Wickenby investigation has deterred Australians who might have considered hiding income offshore.

SMH, September 21, 2006

 


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