Lifestyle assets under the ATO's microscope
Even among the doom and gloom of the pandemic lockdowns, the ATO continues to march on with its data matching programs. This time it has extended a previous data matching program targeting the owners of lifestyle assets such as marine vessels, motor vehicles and caravans, thoroughbred horses, fine art and aircraft. Data will be collected from various insurance companies including policy risk details and policy holder personal details. It is estimated that records relating to approximately 300,000 individuals will be obtained each financial year.
2 year extension of data matching program
Owners of lifestyle assets beware, the ATO has extended its data matching program for another two years. The lifestyle assets data matching program has been running since February 2016 and in the past collected data covering the 2013-14 to 2019-20 financial years. The program is being extended to capture data for the 2020-21 to 2022-23 financial years.
The data matching program will acquire lifestyle asset data from insurance policies issued by insurance companies including: AAMI, Apia, Bingle, CGU, Chubb, Coles, CommInsure, GIO, Lumley, Nautilus Marine, NRMA, QBE, RAA, RACQ, RAC, SGIC, SGIO, Shannons, Suncorp, Swann, Vero, WFI, Youi and Zurich.
Only data on assets that exceed a minimum asset value threshold will be collected under the current data matching program. The thresholds are:
- marine vessels: $100,000;
- motor vehicles, including caravans: $65,000;
- thoroughbred horses: $65,000;
- fine art: $100,000 per item; and
- aircraft: $150,000.
What data will be collected?
Data collected will include individual identification details such as name, address, phone number, date of birth, ABN and email.
Policy details will also be collected including policy start date, total value insured, purchase price of property insured, registration/ID number of the property, insurance category, policy cost, description of the property insured and primary use type.
It is estimated that records relating to approximately 300,000 individuals will be obtained each financial year.
What will the data be used for?
According to the ATO, the data acquired will be matched to develop a holistic risk profile of taxpayers with regard to their assets and accumulated wealth. It will also be used to address a number of taxation risks including:
- accumulation of assets with insufficient reported income in tax returns;
- not declaring CGT or income tax from the disposal of assets;
- purchasing assets for personal use through businesses or related entities and claiming GST credits;
- not declaring and paying fringe benefits tax in relation to the use of assets purchased through business entities; and
- acquisition of assets by SMSFs for the current benefit of fund trustees or beneficiaries.
In instances where a discrepancy is detected, the ATO will contact the taxpayer to obtain verification before any administrative action is taken. Taxpayers will usually be given at least 28 days to respond.
While the ATO notes that the data will not be used as a part of its automated compliance activities, it will be seeking to identify and educate individuals and businesses that may be failing to meet their registration and lodgment obligations in relation to a variety of taxes, including income tax, CGT, FBT, GST and superannuation obligations.
Information obtained from the data matching program will also be used to promote voluntary compliance and develop strategies to improve voluntary compliance. It will also be used to determine avenues available to assist in debt management activities. As with other programs, the data will be retained for five years, so individual and business taxpayers should ensure they have treated lifestyle assets correctly for tax purposes.
If you, your business or SMSF has purchased lifestyle assets valued above the minimum thresholds and need help to ensure that you’ve applied the correct tax treatment, we can help.
There can be severe penalties for claiming tax deductions on “leisure facilities” or for making company assets available for use by shareholders without making appropriate payments for such use.
We have expertise in all areas of tax including income tax, GST, CGT, FBT and superannuation.
Contact us today if you need help.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.