Beware, the ATO is on the hunt for lifestyle assets
This tax time, it's wise to be wary of the the ATO's program aimed at identifying lifestyle assets that have not been properly accounted for or taxed.
It will be utilising data from a number of insurance companies to assess and identify the owners of these assets, allowing it to formulate an opinion on taxpayers who have reported very little taxable income in their personal tax returns but who have accumulated significant lifestyle assets.
Lifestyle assets include personal assets and collectables such as fine art, marine vessels, aircrafts, enthusiast motor vehicles and thoroughbred horses.
The ATO will review these assets for the last two financial years based on the following nominated asset threshold:
- Marine vessels – over $100,000
- Aircraft – over $150,000
- Enthusiast motor vehicles – over $50,000
- Thoroughbred horses – over $65,000
- Fine art – over $100,000
Assets with a value below these thresholds will not be selected for review.
Information will be collected from a number of insurance companies including details of the insurance policy holder (i.e. names, addresses, phone numbers); and insurance policy details (i.e. policy number, policy period, asset and value insured, physical location of asset etc.).
It is estimated that more than 100,000 insurance policies will be obtained by the ATO.
The ATO will match the details on the insurance policy with the information it already holds on the taxpayer to identify non-compliance with registration, lodgment, reporting and payment obligations.
The data collected will be used by the ATO to better understand the assets and wealth of particular taxpayers, and allow it to identify possible compliance issues with income tax, capital gains tax, fringe benefits tax, GST and superannuation.
The ATO has stated that it considers this as an opportunity to promote voluntary compliance and strengthen community confidence in the integrity of the tax system.
Insurance providers can notify clients of their participation in this program and the documents that have been provided to the ATO.
Discrepancies in information
Where there appears to be a discrepancy, the ATO will contact taxpayers and give them the opportunity to verify the accuracy of the information prior to amending any income tax return.
It is therefore a good idea to revisit the insurance policy of any lifestyle assets owned to ensure that all the details are correct and information is correctly reported on financial statements and income tax returns.
Daryl Jones, HLB MANN JUDD
Tuesday, 11 October 2016