Big Brother's Digital Eyes - ATO Data Matching
Posted 03 Jun 16 by Timothy Bow
The ATO recently announced the compliance focus on insured “lifestyle” assets. These assets include personal assets/collectables such as boats, aircraft, enthusiast motor vehicles, fine art and thoroughbred horses. The tax office will select assets for review based on value with assets exceeding nominated thresholds for the 2014 Financial Year and the 2015 Financial Year coming under scrutiny.
In order to identify value, the ATO will source data via insurance policies obtained from 28 insurers and is expected to review more than 100,000 insurance policies. The scope of digitally enabled data matching is enormous and the tax office seem to be finding new and inventive ways to keep watch!
The reported threshold values for the various assets are as follows:
- Marine vessels: >$100,000
- Aircraft: >$150,000
- Enthusiast Motor Vehicles: >$50,000
- Thoroughbred horses: >$65,000
- Fine art: >$100,000 per item
The ATO has indicated that taxpayers with assets below this threshold will not be reviewed at this point in time.
Amongst other objectives, ATO has stated its objectives in conducting this data matching program include gaining a better understanding of a taxpayer’s profile and their compliance with tax obligations. The program is also targeted at promoting the Australian public’s confidence in our taxation and superannuation system.
Notably, this program is not only directed at income tax, the focus will also include GST compliance, FBT compliance and self-managed super compliance.
This activity is another tool in the ATO’s asset betterment arsenal and will help the Commissioner form an opinion on taxpayers who may have accumulated assets over time without a reasonable support in their taxable income presented in their tax returns. The extent of data available to and reviewed by the ATO in making a betterment assessment is expanding almost daily and historically, successfully objecting to a betterment assessment has proven to be a very difficult thing and the penalties that come along with such an assessment have the potential to be very significant.
Like the digital commercial sector, regulators are seeking to exploit data that is available easily, cheaply and in certain circumstances, extends across borders. The breadth of possible review has never been greater.
If you wish to discuss your tax position further, please do not hesitate to contact our tax specialists.