Offshore treasure chest

By Jim Dickins -

THE Australian Tax Office will investigate hundreds of secret Swiss bank accounts and exotic tax havens this year in a blitz on offshore tax evasion.

The campaign could affect everyone from retirees earning income from a foreign pension to corporate criminals.

In the wake of scandal surrounding disgraced stockbroker Rene Rivkin's activities in Switzerland, the tax office will analyse transactions with accounts in that country, as well as Singapore, Austria, Belgium and Luxembourg.

Swiss banking secrecy provisions allow tax cheats and corporate criminals to hide income and evade the scrutiny of Australian authorities.

Meanwhile, treaty negotiations are under way with tax havens Jersey, Guernsey, Antigua and Barbuda, Burmuda and the Isle of Man.

Australia wants to secure information sharing agreements to help prevent residents squirelling money away out of reach.

As the tax office adds hundreds of extra staff for tax-compliance auditing, tax commissioner Michael Carmody has already signalled increased attention on tax liabilities from extra income earned from the property boom, including capital gains and rental expense deductions.

Accountants will not escape the office's spotlight.

"Our profiling has identified at least 700 agents who we will contact to discuss the results and possible reasons," Mr Carmody said. "As necessary, compliance responses for the agent and his or her clients will be developed.

Separately, investigators will audit 1450 individuals earning overseas income in a campaign expected to recover millions in missing revenue.

A spokeswoman said the investigation was sparked by specific information and people should come forward early to declare foreign earnings.

"Its primary focus is aimed specifically at foreign income derived, for example, from foreign pensions, interest and dividends," she said.

"The tax office is encouraging Australian residents who derive income from overseas sources to declare that income in their tax returns."

Treasurer Peter Costello has pledged to reduce offshore evasion, but the battle could prove tough.

Negotiations with tax haven governments have been slow and recovery efforts last year yielded only $1.4 million from 33 individuals.

Rivkin, who was stripped of his licence to provide financial services last week, reportedly used Swiss accounts to hide shares in Offset Alpine, a company whose premises were destroyed in a mysterious 1993 fire.

He is serving nine months' periodic detention for insider trading involving Qantas shares. He was barred from giving financial advice for medical reasons.

This financial year, the tax office will devote 600 extra staff to compliance, spending $3.5 billion, more than half its total budget.

It hopes to recover at least twice that. Last year it recovered $6.4 billion, up $270 million.

Most of the effort will go into audits, investigations and prosecutions.

"We will increase our attention on serious and purposeful non-compliance with our revenue laws, including through the use of tax havens and countries with bank secrecy laws," Mr Carmody said.

Source: Sunday Herald Sun