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Declaring Interest Income

Discussion in 'The Pub' started by Danhendo888, Aug 29, 2014.

  1. anyone have some thoughts on the below situation?

    Person A recalls receiving $2,500 in interest from the bank several years ago for a particular financial year. He also recalls "forgetting" to declare the interest income for that particular years tax return.
    The tax office receives information from the banks about interest paid to its accounts.
    Why didn't Person A get a letter from the tax office about not declaring his interest income?
  2. They probably had bigger fish to fry or the computer flag was overlooked. It doesn't change the obligation to declare income or the chance they may pick it up one day. If Person A was to declare it on their next return the Tax office would more than likely accept it as an oversight and apply no penalty. Person A may choose to keep overlooking it of course and keep their fingers crossed :)
  3. Been there done that, copped the next 4 years being desk topped audited. Now I play very much by the rules.
  4. They should declare it for the next financial year with a note from the accountant that it was overlooked.
    No penalties will apply if that is the case.
  5. How many years ago?
  6. You do not declare it in the next financial year. What you need to do is do an amended tax return for that year. If it is over 7 years from the time you LODGED the tax return then you are pretty much safe to forget about it. Individuals will get audited by the tax office when they focus on a particular thing, for instance people claiming mobile phones for work purposes. Even then not all people get audited.
  7. As far as I am aware the ATO can go back up to 15 years. If they want to go back farther than that, they need the leave of the Court.
    Make a voluntary disclosure
    When a taxpayer tells us about a false or misleading statement they have made to us or a change that increases their tax or reduces their credits - and they do so without prompting, persuasion or compulsion on our part - we generally refer to it as a 'voluntary disclosure'.

    A voluntary disclosure provides you with the opportunity to bring your tax affairs into order. For example, if you have not disclosed income that you know you should have, you have claimed deductions you know you weren't entitled to, or you have made other statements in relation to your affairs that you know were false or misleading. In most cases a voluntary disclosure also opens the way to concessional treatment both for any administrative penalties that apply and any interest charges. (Administrative penalties are those we may impose without taking court action.)

    The amount of any reduction in penalty amounts and interest charges depends on when you tell us about the correction. Generally, the reduction is greater if you make the disclosure before we notify you of an examination. You will have to pay any tax you owe and may have to ask us for any interest concessions.

    How to make a voluntary disclosureHow we process your voluntary disclosure

    We process your voluntary disclosure in the same way as we process the tax return or statement it relates to. This means that voluntary disclosures for income tax are treated as amendments.
    From the ATO.
  8. True, it's just whether they do. The misses deals with this stuff everyday. Also depends on whether you have been in trouble with the tax office before and whether they can prove you purposefully did not disclose the income. When did you lodge? Did someone do it for you, for instance an account who you gave all the information to and they forgot to add it? If you did it yourself did you do it at a time that was really stressful for you such as a death in the family and you weren't coping?

    It's due to all these questions that the ATO decides not to chase people with undeclared values such as this, unless they do a campaign which is a risk you take. I'll ask her what the value is when they really start looking if you like?
  9. One thing I would suggest to the OP if you are still reading this thread is that PersonA doesn't take anything said on here as anything more than opinion, with the possible exception of that which has been copied directly from ATO sources.
    To get accurate, up to date information, PersonA should talk to a tax lawyer or the ATO.
  10. Person A will be visiting a tax agent early next week... from what I've heard..
  11. No this is not how it is done. You lodge an amendment and I would suggest that it be done as the ATO gets better each year at tracking down money owed to it and they will monitor you closely after you've been caught missing income.

    I used to work in tax accounting.
  12. Already covered in the last paragraph of post #7 wouldn't you think?. :)
    • Like Like x 1
  13. I only got to smee's post before thinking 'argghh terrible advice, don't listen to this!' and replied in haste before I read the rest of the posts ;)
  14. Hehehe, replying in haste on NR ? Never.:D
  15. been there, done that..
    amended tax return for that year, some sob story as to why/how you forgot (I had actual reason.. bank didn't take out TFN non-resident amounts while I was OS), and hopefully taxman will not be nasty and fine you :)

    if you have accountant, get them to do it.
    for 2.5K, tax is probably 6-800? ATO will likely apply interest on the unpaid amount in that case
  16. to answer that bit, if you have declared TFN, but the bank is not required to take out withholding tax, there is no need for bank to tell ATO about tax on that account, as bank assumes you will tell ATO about the interest income.
    the ATO may have already received the income info from bank previously but not acted on it

    if bank is doing an Audit, and/or ATO crosschecks the info on tax paid against income declared, as they do time to time but not all the time, then they will send you letter.
    they don't check every year (in the next tax year), they expect you to get it right and be honest.. if after a couple of years a red flag comes up, then they start chasing your pennies :D
  17. cool, are you an accountant?
  18. Not these days but I used to be. I still do some bookkeeping and tax for a few friends' businesses though.
  19. #19 Mcsenna, Aug 30, 2014
    Last edited: Aug 30, 2014
    Hey sas can you wave your wand over my books and turn red into black :)
  20. Well given doing tax was my job for years even if it was repeated information I think if I was the OP I'd want to hear the advice from someone who was in the business!

    McSenna, I'm a bit rusty now sorry :)