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brisbane • sydney • melbourne

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A collection of updates, articles and papers written by The Little CFO & The Little CFO Legal

Taxpayer Alert concerning the disguising of undeclared foreign income as gifts

The ATO has released a new Taxpayer Alert in relation to situations concerning the disguising of undeclared foreign income as gifts or loans from related overseas entities.


In the Taxpayer Alert (TA 2021/2) the ATO provided 3 examples of known arrangements where foreign assessable income is disguised as a gift or loan from a related overseas entity.


This is one such example.


The examples provided by the ATO are illustrative of the broader features of these arrangements and the ATO's concern is not limited to the specific scenarios described.


The ATO are currently undertaking reviews and audits and are actively engaging with taxpayers who have entered into these arrangements.


Taxpayers and their advisers who enter into these arrangements will face substantial penalties

and may be at risk of potential sanctions under criminal law.


As part of the review and audit process, the ATO uses data:

🌍 obtained from foreign countries

🌍 obtained from AUSTRAC

🌍 obtained via the Common Reporting Standard; and

🌍 obtained via the Foreign Account Tax Compliance Act.


In our next post in this TaxPayer alert series we will see further examples of arrangements from the ATO's Taxpayer Alert where foreign assessable income is disguised as a gift or loan from a related overseas entity.


⚠️ If you have received a notice from the ATO regarding your tax affairs or have concerns about potential mistakes in your tax reporting, contact us for a confidential consultation: legal@littlecfo.com


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