DESCRIPTION
The taxpayer establishes an offshore structure, or uses an existing structure, in a tax haven or country with bank secrecy with the assistance of a promoter. The promoter may provide a 'paper trail' of documents designed to conceal the true nature of these transactions and the taxpayer's interest in the offshore structure. 2. The offshore structure may include one or a combination of the following types of entity, which are promoted on the basis of not being subject to attribution under Australia's anti-deferral regimes: a) An offshore trust, including bare, blind or discretionary trusts; b) An offshore company, including tax haven entities known as international business companies; c) Another type of entity, including Anstalts or Stichtings. 3. The taxpayer transfers an asset to the offshore structure at a price substantially below its market value. 4. Assets may include shares, intellectual property or other intangibles, or the creation of a new asset such as the assignment of rights to future income. 5. The offshore structure then uses the asset to generate passive income which is retained by the structure. 6. The taxpayer may access this income often in a disguised form. 7. The taxpayer does not pay the correct amount of Australian tax on the initial disposal of the asset to the offshore structure, i.e. the gain that would have resulted from a market value sale to a third party. 8. The taxpayer does not disclose their involvement with the offshore structure and does not pay Australian tax on the income generated by the offshore structure from the use of the asset or when they access that income. 9. In some arrangements, the documentation supporting the above transactions is absent, incomplete or falsified and the valuations used may be highly questionable. In addition, such documents do not disclose the Australian resident's interest in, or involvement with, the offshore structure.