Lifestyle assets continue to be an ATO audit target
The ATO has revealed it will request a further five years’ worth of policy information from over 30 insurance companies about taxpayers who own marine vessels, thoroughbred horses, fine art, high-value motor vehicles and aircraft.
The ATO expects to receive information about assets owned by around 350,000 taxpayers from 2016 to 2020 as part of its data-matching program.
This information (provided by insurers) is intended to be used by the ATO as part of its compliance profiling activities.
For example, ATO Deputy Commissioner Deborah
“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
She clarified that the data will not be used to initiate an automated compliance activity.
“Taxpayers selected for compliance activities are
identified through other methodologies. The data
is made available to our compliance teams to
support their risk profiling of the selected taxpayers.
Existence of an insurance policy may or may not
prompt the compliance officer to pursue a particular
line of enquiry.”
Aside from helping identify taxpayers who may be understating their income, the data from insurers may be used by the ATO to identify taxpayers who have made capital gains on the disposal of certain assets but who have not declared this to the ATO.
It will also be used by the ATO to identify incorrect claims for GST input tax credits where taxpayers are incorrectly claiming GST credits as if the (private) item was a business asset.
Additionally, SMSFs the ATO suspects may be acquiring lifestyle assets purely for the personal enjoyment of the fund’s trustee or beneficiaries are\ also likely to be looked at by the ATO. Insurers are required to provide the ATO with policy information where the value of assets is equal to or exceeds the following thresholds:
- Marine vessels $100,000
- Motor vehicles $65,000
- Thoroughbred horses $65,000
- Fine art $100,000 per item
- Aircraft $150,000