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ATO to unleash "massive taskforce" on unlawful foreign buyers

Discussion in 'Property Market Economics' started by MGF, 15th Aug, 2015.

  1. MGF

    MGF Well-Known Member

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    http://www.afr.com/real-estate/ato-...nlawful-foreign-buyers-20150814-giz31h?stb=fb

    A personal email from Australian Taxation Office assistant deputy commissioner Michael O'Neill convinced a Sydney estate agent that a government crackdown on foreign buyers was not in fact "a farce", as he had previously believed.

    Mr Robert Simeon, director at estate agents Richardson & Wrench in Mosman on Sydney's lower north shore last week described Federal Treasurer Joe Hockey's announcement of 6 divestment orders against foreign homeowners and 462 property investigations as "nothing more than a PR stunt".

    In comments to The Australian Financial Review he claimed there were tens of thousands of illegal purchases.

    But on Friday he said he was "left eating humble pie" following the surprise email and later phone call from Mr O'Neill, who heads up serious non-compliance at the ATO.

    ...
     
    Last edited by a moderator: 24th Sep, 2015
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  2. Greyghost

    Greyghost Well-Known Member

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    Moves by the ato are all politically based.
    The government (labour or liberal) cannot be seen to raise taxes at present.. Or they will be ourski very quickly, so they are doing it via the back door.
    Look at target areas with the ato that will give the best ROI, ie task force cost for additional taxes returned..

    Ato is just another business like any other.. Don't be under any illusion..
    It is what is not said by the governor that is of most concern!!!!
     
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  3. Kangabanga

    Kangabanga Well-Known Member

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    Imagine the flood of stamp duty monies once the task force starts clamping down and force selling all those million dollar homes in Syd/Melb. KACHING!!!
     
  4. C-mac

    C-mac Well-Known Member

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    I'll be watching this with a keen eye.

    A friend mentioned (Google has yet to bring up anything to confirm) that also as of either October or November; local lenders will be required to submit the tfn numbers of their customers who's names appear on the loan docs (I.e. personal named buyers, not people buy in trust or company structures ).

    If true, this would be a dramatic evolution of the crackdown. It would mean that illegal buyers who suddenly have say $1 million appear in their account within a financial year, and suddenly buy a property, will be identifiable to the ATO. The ATO will say 'where did the $1mill come from?'. The person who's name is on the mortgage would then have to pay a load of income tax.

    Of course, I can easily think of at least 4 ways that cunning illegal buyers can find work arounds... cash purchases (no lender data needed); using foreign lenders who aren't subject to the rules, to buy in Australia etc. Plus avoidance of tax on account of the $$$ being 'family gifted '. I wonder how many generations removed are the gifting tax law?? I.e. can 9th cousins gift each other a million $ and avoid tax??

    Sometimes I wish Australia would just get rid of cash altogether. Once we do, there'd be no hiding for anyone and it'd be fair. We would know where all money is coming and going from. No more "cash only" restaurants etc.
     
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  5. Tekoz

    Tekoz Well-Known Member

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    This will only affects the illegally bought McMansion, so the existing apartments or houses will be put back on the market with the same price as it was before.

    I guess anyone waiting for a bargain will be heavily & quickly dissapointed.
     
  6. Kangabanga

    Kangabanga Well-Known Member

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    More foreign buyers forced to sell properties
    A crackdown on illegal investment in real estate has broadened, with almost 500 properties worth more than $1 billion in total under investigation and more foreign buyers forced to sell properties.


    Treasurer Joe Hockey said divestment orders have been served on five properties across the country, forcing their owners — who hail from Singapore, Indonesia, the UK and China — to sell homes. He added that the crackdown is continuing despite political turmoil this week that saw Malcolm Turnbull replace Tony Abbott as prime minister.

    “The purchase prices of the properties range in value from $265,000 to $8.1 million,” Mr Hockey told reporters in Canberra.

    Mr. Hockey said all five owners had voluntarily come forward to detail their investments, meaning they would have a year to sell their homes rather than the usual three months, under an amnesty offer announced by the government in May.

    Read complete article link below...
    http://www.theaustralian.com.au/bus...-sell-properties/story-fn9656lz-1227530333452

    ====================================================

    Looks like more forced sales coming on the way. 500 won't exactly flood the markets in Syd/Melb but if they happened all in the same few months there could be a spike in auction numbers, more SUPER SATURDAYs to come perhaps? That's quite a bit of sorely needed stamp duty the government needs :D

    When the ATO needs money its quite hard to avoid 'em.

    I am imagining them doing a reality TV series where they "storm" all those illegal props which have been served notices but owners are overseas and have left the property empty for landbanking and don't even know about the notices. Maybe called "The Chopping Block"

    Good on ya' hockey!
     
    Last edited: 16th Sep, 2015
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  7. wategos

    wategos Well-Known Member

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    Plenty of people quite easily avoid the ATO, paying no tax on rent received from investment properties. The properties are never declared on tax returns, real estate agents don't have to report rental income received and the ATO has no way of detecting it.
     
  8. tomwilks

    tomwilks New Member

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    ATO has pretty sophisticated data matching capabilities these days. I wouldn't be so sure that people who own investment properties can avoid them.
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Nice diversion from the real holes in the bucket

    ta
    rolf
     
  10. 2FAST4U

    2FAST4U Well-Known Member

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    I think it's only a matter of time unless you have a tenant that is willing to pay you cash instead of sending it through to your bank. I do my tax returns through E-Tax and the income I made from properties wasn't reported but I filled it in voluntarily. However, all my salary income and all the bank interest I accrued was accurate to the dollar along with my super and HECS debt etc.

    Companies like Westfield use a product called Quantium, which they purchase of the NAB bank. So basically if you're a NAB customer and you have a credit card with them it tracks all your purchases and where you spend your money etc. The NAB sell that data to companies like Westfield and than Westfield analyses that data to work out how to draw more customers into their shopping centres etc. If banks sell information off to private companies of course they are going to have no qualms about releasing their customers details to Government agencies. Therefore, if the ATO had suspicions about you earning undeclared rental income it wouldn't be hard for them to trace it and the bank would most probably comply with 'oh yeah 2FAST4U has multiple accounts where x transfers $x each fortnight etc.'.

    Personally I wouldn't want to take the risk would prefer just to be upfront instead of facing possible repercussions down the track for tax evasion.
     
    Last edited: 17th Sep, 2015
  11. wategos

    wategos Well-Known Member

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    I know a couple that have successfully rented out their previous home (though a RE agent) for over 14 years tax free, never declared it, never caught, the ATO hasn't got a clue. I think the "sophisticated data matching" claim is mostly just bluff to scare people.

    Although in some circumstances people might get caught, there are plenty of scenarios where they wont. Simple annual reporting by RE agents of property rental income would reap hundreds of millions in unpaid tax.
     
  12. wategos

    wategos Well-Known Member

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    This is the problem.. property income is not reported like dividends and interest are, and there is massive abuse of this.
     
  13. Waterboy

    Waterboy Well-Known Member

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    Fantastic. More properties on fire sale!!!
     
  14. Tekoz

    Tekoz Well-Known Member

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    @Waterboy yeah, but it won't be cheap as the price is already expensive to the market rate mate.
     
  15. jaybean

    jaybean Well-Known Member

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    If I was in charge (ha!) I'd hire entrepreneurs to sniff out the holes, the way software companies hire hackers to improve their systems. Treat it like a creative enterprise - identify innovative strategies being employed, offer substantial rewards for not only finding them but coming up with cost effective solutions like the one you just mentioned. I can't imagine the public servants in charge are burning the midnight oil thinking about this. Things are only actioned when they are big enough to make it to mainstream press. Imagine a thousand little projects like this across the board, from RE to welfare - the nation would be billions ahead.
     
  16. Kangabanga

    Kangabanga Well-Known Member

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    "When we look at the feeds we get from immigration, the feeds we get from Australia track, getting all the information from the land titles offices, running that against all tax returns, we are seeing examples of very young people who are here on maybe a student visa, never having lodged a tax return, yet acquiring property of, say, $5 million," he told the press conference.

    Mr Jordan says the investigations into illegal foreign purchases of real estate are also unearthing potential tax evasion and money laundering.

    “We will be looking also at where’s the income if people have these places rented? How come you have not disclosed income?

    http://www.abc.net.au/news/2015-09-16/foreign-investment-crackdown/6779998

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    There ya go wategos, ATO is starting to look into undisclosed rental income as well now. First milk the illegal foreigners, after when thats done they might proceed to the locals breaking the law. Imagine back paying 7 years worth of taxes on rental income or worse put in jail for tax evasion.

    Most people doing negative gearing would have reported property income anyways during tax time every year, so there will be a record. And those positively geared would have to provide documentation to their banks for loans indicating the property rental income for assessment of serviceability wont they? Easy for ATO to get records from bank's loan department and tally to tax return.

    Of course those landlords with fully paid for properties and who collect the rent in cash would very likely be able to "fly under the radar"
     
    Last edited: 18th Sep, 2015
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  17. wategos

    wategos Well-Known Member

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    Yes this is the mechanism I know for a fact is abused substantially. Real estate agents are involved though, the rent is not paid in cash, but the ATO still doesn't detect anything. Real estate agents are still off their radar at the moment, they need to bring them under it if they want to get serious.
     
  18. Kangabanga

    Kangabanga Well-Known Member

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    125 foreign real estate buyers use tax office amnesty to declare ownership

    One hundred and twenty-five foreign investors have taken up an amnesty offer from the Australian Tax Office to declare their ownership of real estate, according to documents obtained by Guardian Australia from a freedom of information request.

    The 125 investors have moved ahead of the deadline expiring on 30 November, the documents show.

    A spokeswoman for the ATO said it had separately identified about 500 potential breaches of foreign investment laws it was investigating, a number of them from disclosures.

    125 foreign real estate buyers use tax office amnesty to declare ownership

    --------------------------------------------------------

    2 more weeks to go before deadline...
     
    Last edited: 16th Nov, 2015
  19. Tekoz

    Tekoz Well-Known Member

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    Is there any report or updated article for this ATO illegal foreign buyers crackdown ?
     
  20. Kangabanga

    Kangabanga Well-Known Member

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