The ATO will be requesting an extra five years’ worth of policy information from more than 30 insurance companies about Australian taxpayers that own a group of specific “lifestyle assets”.
The tax office will be asking for details on clients who own items such as yachts and other marine vessels, fine art, thoroughbred horses, high-value motor vehicles and aircraft which are valued over certain thresholds.
It’s all part of a plan to make sure Aussies are playing fair by paying their fair share of tax and meeting their superannuation reporting obligations.
The blitz will see the ATO receive financial information on around 350,000 taxpayers from 2015-16 to 2019-20 as part of its data-matching program of work.
Those details will then be used as part of “compliance profiling activities” – or in other words, to check the income being reported by those Australians matches their true wealth.
According to deputy commissioner Deborah Jenkins, fancy items like private jets and yachts could indicate a discrepancy between someone’s real financial situation – and what they might report on their tax return.
“If a taxpayer is reporting a taxable income of $70,000 to us but we know they own a three million dollar yacht, then this is likely to raise some red flags,” Ms Jenkins said.
“Our job is to ensure everyone pays their fair share of tax, regardless of their level of wealth.
“A small percentage of taxpayers are not paying their fair share of tax by deliberately omitting income or over-claiming expenses. These taxpayers significantly contribute to the gap between the tax collected and the amount that would have been collected if everyone was fully compliant with tax law.”
She said lying about your income or failing to declare capital gains was effectively “stealing from the community” and meant there was less cash in the kitty for things like infrastructure and services we all rely on like schools, hospitals, and roads.
“What we may discover is that some people have been declaring a level of income that simply does not add up when we compare it to the value of their assets like art, yachts, or aircraft. And this is unfair,” she told news.com.au.
“If you happen to have an asset insured that is valued over the prescribed threshold there’s no need to be concerned if you are genuinely reporting your income and expenses to meet your tax obligations.
“Just because we receive information from an insurer about an item you have insured, does not mean we will be contacting you or your tax professional to seek more information or commence an audit.”
She said the data could also help the ATO identify taxpayers who have made capital gains on the disposal of certain assets without declaring it, or those who bought the items for their own use only to declare it as a business asset and claim GST credit.
“With high value assets like fine art, there can be some significant capital gains made when these assets are sold, and capital gains tax may need to be paid on the sale or disposal of
these items,” she said.
“If we discover incorrect GST input tax credit claims for items purchased for personal reasons, we’ll be following up and seeking full repayment on top of any applicable interest
The ATO is also likely to look into self-managed super funds suspected of buying lifestyle assets for personal use by the trustee or beneficiaries.
The tax office will be requesting details on assets at or above the below thresholds.
• Marine vessels: $100,000
• Motor vehicles: $65,000
• Thoroughbred horses: $65,000
• Fine art: $100,000 per item
• Aircraft: $150,000
If you suspect you’ve made a mistake with your tax obligations, you are encouraged to speak with your tax agent or make a voluntary disclosure to the ATO, which means you will likely receive a reduction in the administrative penalties and interest charges.
For more information visit the ATO website.