Recently, all tax accountants will have received information from the tax office about a new initiative around overseas income. The tax office are a little concerned that some people are hiding foreign investments and want to bring those to account asap. So, they have introduced a new Offshore Voluntary Disclosure Initiative (OVDI) wherein you can approach them – anonymously – to ask what the implications would be if you were to come forward.

In cases where admitting to foreign income results in a tax bill of under $20,000 per year, the tax office will waive the usual penalties. For larger tax bills, the penalty would be reduced to just 10% – in audit circumstances, that could otherwise be as high as 90%. Ouch!

So, if you’ve got an overseas investment property and haven’t been reporting it… you probably should look at taking up the offer. The tax office have connections with many overseas banks and tax departments, so the odds of being caught are only increasing, especially if you bring that money back into Australia.

Now, the better news;

Many investors that we speak to have property overseas, and many of those investors currently have them running at a loss (after depreciation). That loss, even though it’s incurred overseas, can still be negatively geared against other Australian income for most investors. And if you’ve paid any tax in that property already, you may also be able to claim a foreign tax credit for that income as well.

Not quite sure where this places you? Drop us a line.