Tax avoidance by evasion is a criminal offence and Australia, like many other countries, has very strict rules about its residents who hold offshore bank accounts.
It is not illegal to have an offshore bank account, but it is illegal not to declare the income and earnings from that offshore bank account in your tax return.
The penalties for not declaring are severe and range from monetary penalties, confiscation of your passport, to incarceration.
The monetary penalties can start at 75 per cent of the tax not paid on the foreign earnings, plus compound interest, and then your case can be referred to a government agency, the Australian Federal Police for further investigation, or the Department of Public Prosecutions for investigation, criminal prosecution and possibly gaol.
Foreign revenue authorities, particularly members of the OECD, have agreed to work together to stop non-disclosure of offshore bank accounts.
With the arrival of the internet and the intelligence gathering that has been occurring for many decades, the information processed, reviewed and analysed leads to a targeted investigation by organisations such as the Australian Taxation Office, the UK Inland Revenue or the US Revenue Authorities.
If you have offshore accounts in countries such as Switzerland, Hong Kong, Liechtenstein or Israel the net is closing in on you.
While amnesties such as Project DO IT (Disclose Offshore Income Today) finished in December 2015 people can still come forward to the Commissioner of Taxation and make voluntary disclosure through a trusted adviser, such as their accountant or lawyer.
By coming forward with your voluntary disclosure the penalties imposed by the Commissioner and the prospect of criminal investigation can be significantly reduced.
BDO Tax Partner Carlo Moretti was recently interviewed by SBS Radio and he outlined the process for declaring offshore bank accounts. To listen to his interview with Nitza Lowenstein of SBS Radio please click here.
Should you have any queries in relation to the voluntary disclosure process for offshore bank accounts please contact your local BDO tax adviser.