Last week, the Tax Office announced it would request to receive 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 request will see the Tax Office’s lifestyle assets data-matching program extended up to 2019–20, with the agency already holding insurance policy information for the 2013–14 and 2014–15 financial years.
Marine vessels over the value of $100,000, motor vehicles worth over $65,000, thoroughbred horses worth over $65,000, fine art over $100,000 per item, and aircraft worth over $150,000 all fall within the ATO’s data-collection scope.
H&R Block director of tax communications Mark Chapman said that while the program might look like it would only target high-net-worth Australians, the reality was that everyday taxpayers might get picked up as well.
“Although the ATO is flagging this as an exercise aimed at wealthy Australians, in reality quite a few ordinary Aussies are likely to get caught in the net too. For motor vehicles, for instance, the ATO is getting data on all cars insured with a value of $65,000 or more, which will bring in quite a few higher-end utes and four wheel drives,” Mr Chapman said.
“The best advice is that if you have some tax skeletons in your cupboard, talk to a tax professional who will be able to help you to make a voluntary disclosure to the ATO.
“Owning up to your misdeeds won’t make the tax debt go away but it could save you additional penalties of up to 95 per cent of the tax bill.”
Mr Chapman said the insurance data grab was a “win-win” scenario for the ATO, with the program having proven successful before.
“Working backwards from the assets you own (cars, houses, boats, artworks etc) to the income you declare to the taxman is a tried-and-tested way of catching tax cheats and this new haul of data will simply make it easier for the ATO to build a complete picture of your actual finances compared to the finances you report to the ATO.
“In addition, once the ATO knows you own a certain asset, they’ll be able to look out for the capital gain that you should declare when you sell that asset and the GST you might have incorrectly claimed when you bought the asset. In short, it’s a win-win for the taxman.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.