The ATO is increasing data matching activities to identify discrepancies amongst individual taxpayers such as undeclared income and incorrect claims. These activities include online selling (eBay) transactions as well as information regarding visa holders in Australia. In addition, Lifestyle assets and historic property transactions will be reviewed.
The ATO published their Lifestyle assets 2013-2014 and 2014-2015 financial years data matching program protocol, whereby they gave notice of their intent to collect data from insurers to assist them in their profiling of taxpayers’ wealth.
According to the program’s protocol the ATO will obtain information on insurance policies for certain classes of assets, including marine vessels (e.g. boats), aircrafts, enthusiast motor vehicles, thoroughbred race horse and fine art.
Although the data will not be used directly to initiate compliance activity, compliance staff will be able to use it to help them when profiling taxpayers selected for audit and review activities through other methodologies. When a taxpayer has an insurance policy for one of the above-mentioned assets it may prompt the compliance officer to pursue a particular line of enquiry.
When profiling taxpayers this data may be helpful in establishing whether a taxpayer accumulated or improved his assets but did not include sufficient income in his tax return to show that he indeed had the financial means to pay for it. During the profiling the compliance officers may also learn whether a taxpayer disposed of assets but did not declare the revenue and/or the capital gains when he sold/disposed of the assets. This program protocol may also provide compliance officers with information regarding GST, fringe benefits tax and self-managed super funds compliance issues.
The ATO will get their data from various insurers. At the time of publishing they were Affinity Equine Insurance Solutions, AIG Australia Ltd, Allianz, AON, Associated Marine Insurance Agents Pty Ltd, Australian Alliance Insurance Company Ltd, Catlin, CGU Insurance, Club Marine Ltd, Comminsurance, GIO General Insurance, IAG, Insurance Australia Ltd, Insurance Manufacturers of Australia Pty Ltd, Just Car Insurance, Lumley Special Vehicles, NRMA, QBE Insurance (Australia) Ltd, RAA, RACWA, RACQ Insurance Ltd, RACV, Shannons, Suncorp Metway Insurance Ltd, Wesfarmers General Insurance Ltd, Westpac, YOUi, Zurich.
This list is not limited to the insurers mentioned, and will grow as the ATO obtain data from other general and specialist insurers.
Real Property Transactions Data Matching Program Protocol
The ATO also advised that it will continue its “Real property transactions
1985–2017 data matching program protocol”. This will ensure that taxpayers correctly meet their taxation obligations with regards to their dealings with real property. The ATO will get the data from all State and Territory Revenue authorities, many Finance departments and Land and Residential Tenancies.
The data they will collect will be on landlords, properties, rental income, taxpayer details on property valuations, sales and purchases.
(This information was taken from the ATO’s Website and a more detailed explanation is available at the following link)
Penalties, interest charges and offences
If the ATO check a taxpayer’s records and find that the tax liability has been understated or entitlements overstated then penalties and interest may be charged. The ATO can also prosecute a taxpayer.
Often the amount of the penalty that may apply can be reduced by making voluntary disclosure to the ATO. The sooner voluntary disclosure is made the higher the possibility for a significant reduction in penalties.
If you are a business, your first 30 minute consultation with us is free. For more information on whether the ATO’s Data Matching Program for Lifestyle assets and property transactions are applicable to you, contact us at 08 9562 0526 or email us at firstname.lastname@example.org.