Lifestyle Asset Purchases - Is the ATO watching you?

|by Steve Payne|Taxation and Compliance

Lifestyle assets data matching program launched

The Australian Taxation Office (ATO) has published a notice in the Commonwealth Gazette on 14th July 2021, detailing a new data matching program, that will extract data from insurance policies held on “lifestyle assets” (eg motor vehicles, marine vessels, aircraft, horses, artworks).

Policies for 2020-21 through to 2022-23 will be examined for the following assets where the value is equal to or exceeds designated thresholds.

The ATO will acquire lifestyle assets data from insurance policies for 2020-21 through to 2022-23 for the following assets where the value is equal to or exceeds nominated thresholds.

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horse

This information will be used for examining discrepancies between assets and income, accounting for GST and CGT, and for SMSFs that may be incorrectly using the assets to the benefit of the fund's trustee or beneficiaries.

car

The ATO has estimated that records relating to approximately 300,000 individuals will be obtained each financial year with the data acquired and matched, to improve compliance risk profiling of taxpayers and provide a better view of their assets and accumulated wealth.

The focus for the ATO is on a number of taxation risk areas, including:

  • taxpayers accumulating or improving assets with insufficient income reported in their tax returns to show the financial means to pay for them
  • income tax and capital gains tax (CGT) - taxpayers disposing of assets and not declaring the revenue and/or capital gains on those disposals
  • goods and services tax (GST) - taxpayers may be purchasing assets for personal use through their business or related entities and claiming GST credits they are not entitled to
  • fringe benefits tax (FBT) - taxpayers may be purchasing assets through their business entities with no apparent nexus with their business activities, but rather applying those assets to the personal enjoyment of an associate or employee giving rise to a fringe benefits tax liability
  • self-managed super funds (SMSFs) may be acquiring assets but applying them to the benefit of the fund's trustee or beneficiaries.

If you would like further information relating to the proposed operations under this program, please do not hesitate to contact our team members.

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