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In a recent coordinated effort with Joint Chiefs of Global Tax Enforcement (J5), the ATO, along with its international partners took part in the first set of enforcement actions to stop suspected facilitation of offshore tax evasion. The J5 was initially formed in 2018 to fight global tax evasion and consists of the tax and revenue agencies of Australia, United Kingdom, United States, Canada and the Netherlands. The countries share intelligence on international tax crime as well as money laundering.
The current international investigation started on information obtained by the Netherlands, which led to a series of investigations in multiple countries and concerned an international financial institution located in Central America whose products and services are believed to be facilitating money laundering and tax evasion for customers across the globe.
J5 members believe that through this institution, a number of clients may be using a sophisticated system to conceal and transfer wealth anonymously to evade their tax obligations and launder the proceeds of crime. The enforcement action consisted of evidence, intelligence and information collecting activities such as search warrants, interviews and subpoenas.
According to the ATO, several hundred Australians are suspected of participating in these arrangements and it is currently proceeding with multiple investigations with support of the Australian Criminal Intelligence Commission (ACIC). In addition, it is also encouraging anyone with information about the scheme or other similar arrangements to contact it to make a tip off.
ATO Deputy Commissioner and Australia’s J5 Chief, Will Day said “this multi-agency, multi-country activity should degrade the confidence of anyone who was considering an offshore location as a way to evade tax or launder the proceeds of crime.”
While the J5 is a powerful tool, it is by no means the only such tool in the ATO’s arsenal. The ATO also has a network of international tax treaties and information exchange agreements with over 100 jurisdictions and use information to identify facilitators such as banks, lawyers and financial advisers. Once a pattern has been identified such as a practitioner with a large number of clients using the same methods to avoid or evade tax, the ATO is likely to look closely at the entire client base.
Remember, offshore assets are not just for the wealthy. Many Australians with migrant backgrounds may not even know they hold offshore assets in some cases. For example, grandparents or other relatives may start a bank account in your name in another country to make contributions to celebrate a holiday, birthday or other life events.