As technology advances, so has the ability to trace transfers to and from bank accounts both in Australia and overseas. The ATO has embraced this technology and matches this information with what has been provided in your tax return.
While you think that the “gift” your Aunty Maud sends you each month doesn’t need to be declared, you might be mistaken. While some gifts aren’t necessarily classed as assessable income, they may still need to be reported on your income tax return. This may not have an impact upon your tax position, but may affect your Centrelink entitlements. If you are receiving regular monetary “gifts” from overseas, we encourage you to contact our office to discuss your position.
Also, the ATO recently announced that it has joined forces with the United States Internal Revenue Service to share bank account information. They are using this information to identify undeclared foreign income and possible tax evasion. This includes situations such as:
- someone who has immigrated to Australia but has kept a bank account in their country of origin used to pay insurance payments or fund holidays
- frequent travellers who have set up bank accounts in other countries to use while travelling
- Australian residents who work overseas and have an overseas bank account
- Non-residents who have an Australian bank account
Not only does income earned on these accounts need to be considered, but also whether the foreign exchange rules apply to tax and allow for exchange gains and losses made on withdrawals from overseas bank accounts.
By 2017 the ATO anticipate having a reciprocal agreement to do this with almost 100 countries. For further information, please click here.
If this causes you some heart palpitations, please speak with your accountant who can advise what you need to do next.