The ATO announced on 18 December 2019 (just in time for Christmas) an extension to their insurance policy request from insurers for another 5 years to include the year(s) ended 2016 – 2019 as part of their ongoing taxation compliance profiling activities to identify those taxpayers who are not fulfilling their tax and superannuation reporting obligations.
The ATO has had concerns for some time that not all taxpayers are:
- reporting their full income for taxation purposes;
- using various tax structures to shield income from the taxation system;
- incorrectly claiming GST on assets as if it was a business use asset which are used purely for personal reasons; and/or
- disregarding potential capital gains on sale of these assets.
The ATO has been using a variety of data matching measures to identify those individuals who own or control significant assets to ensure that their level of income reported to the ATO is consistent with the taxpayer’s “lifestyle”. The ATO now receives a vast amount of data from banks, insurers, state titles office(s) and other agency to help them identify at risk taxpayers.
This new request will require insurers to provide detailed policy information where the value of assets is equal to or exceeds the following thresholds:
- Marine vessels $100,000
- Motor vehicles $65,000
- Thoroughbred horses $65,000
- Fine art $100,000
- Aircraft $150,000
Under the program, the ATO has already collected data on insurance policies for the 2013–14 and 2014–15 financial years. The ATO expects to receive information about assets owned by around 350,000 taxpayers from 2015–16 to 2019–20 as part of its data-matching program of work.
ATO Deputy Commissioner Deborah Jenkins said that if a taxpayer reports their taxable income to be $70,000 to the ATO but they have a yacht valued at $3 million then there is likely to be some red flags raised.
Taxpayers who make a voluntary disclosure can generally expect a reduction in the administrative penalties and interest charges that would normally apply.
Are you at risk? We can help you.
At Solve Accountants we are experienced in managing high- value voluntary disclosure(s) and taxation audits with the ATO. If you have concerns you may be at risk, please contact us to discuss your options. Having a plan in place prior to any action by the ATO is prudent.
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