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.
Insurers will be asked 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
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, with the information intended to be used as part of the ATO's compliance profiling activities.
As an example, ATO Deputy Commissioner Deborah Jenkins said:
“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.”
However, Deputy Commissioner Jenkins also clarified the data will not be used to initiate 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. 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.
If you feel that you may be targeted by this latest ATO data collection activity and are concerned about the implications, please feel free to contact our team to discuss your individual circumstances.