ATO’s Data-Matching Programme Continues to Focus on Lifestyle Asset Purchases

The Tax Office has now extended its lifestyle assets data-matching program for the 2020/21 financial year through to 2022/23. They will acquire insurance policy information from 25 insurance providers for certain classes of asset including motor vehicles with values of $65,000 and above, marine vessels above $100,000, thoroughbred horses over $65,000, fine art over $100,000 per item and aircrafts over $150,000.

The ATO are expecting to identify around 300,000 individuals each year with their data-matching program that has been in operation since 2016. It is designed to give the ATO an insight into individuals who may have been declaring insufficient income in their tax returns to support the purchase of these luxury or lifestyle assets. Taxpayers who dispose of assets and do not declare the revenue or capital gains on disposal of those assets will also be identified. Data collected by the ATO will be retained for five years.

According to the ATO, it will also help identify taxpayers who are purchasing assets for personal use through their business or related entities and claiming GST credits they are not entitled to plus people who are using those assets for the personal enjoyment of an associate or employee which may give rise to a fringe benefits tax liability. The program will also be used to identify SMSFs that may be acquiring assets but applying them for the benefit of the fund’s trustee or beneficiaries.

Where an individual has been identified for not complying with their tax obligations, the ATO said it will apply

“appropriate treatment recommendations” but noted that it will not result in the “automated generation of compliance activities”. “Where a taxpayer is correctly meeting their obligations, the use of the data will reduce the likelihood of contact from us,”

said the ATO.

“In cases where taxpayers fail to comply with these obligations even after being prompted and reminded of them, escalation for prosecution action may be initiated.”

The extension of the lifestyle assets data-matching program comes as the ATO increasingly relies on similar programs including its work on motor vehicles and cryptocurrency to ensure taxpayers are meeting their tax and superannuation obligations. The ATO will continue to collect records from eight state and territory motor vehicle registries for the 2019/20, 2020/21 and 2021/22 financial years. Registry records for around 1.5 million individuals are expected to be collected each year for any newly registered or transferred vehicles with a purchase price or market value of $10,000 or more.

According to the ATO, the records will help it “identify higher-risk taxpayers with outstanding lodgements and those with undeclared income whose asset holdings may not be proportionate to their declared financial position”.

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