What do yachts, thoroughbred horses, original art pieces, air crafts and luxury cars all have in common? Aside from usually being owned by the wealthy, these assets are all things the ATO will be scrutinizing when investigating tax fraud.
The ATO has announced that it has requested five more years of policy information from over 30 insurance companies for taxpayers that own luxury items.
The move comes as the tax office tries to zero in on Australian residents who are purchasing luxury items for personal use but use their business to claim tax credit that they are not entitled to. The ATO believes this will also help uncover tax payers who are using luxury items for the enjoyment of an associate or employee’s personal use but claim business tax benefits.
Around 350,000 tax payers will be analysed when the data is returned.
Some of the items that fall into the ATO’s data collection scope are:
- Marine vessels over the value of $100,000
- Motor vehicles over the value of $65,0000
- Thoroughbred horses over the value of $65,000
- Fine art over the value of $100,000 per item
- Aircrafts worth over the value of $150,000
ATO deputy commissioner Deborah Jenkins says that while the information is being collected from insurance companies, it won’t mean that only tax payers who have bought items on the list will be targeted.
“Taxpayers selected for compliance activities are identified through other methodologies. The data is made available to our compliance teams to support their risk profiling of the selected taxpayers. Existence of an insurance policy may or may not prompt the compliance officer to pursue a particular line of inquiry,” Jenkins said.
“If a taxpayer is reporting a taxable income of $70,000 to us but we know they own a $3 million yacht, then this is likely to raise some red flags.
“Regardless of your level of wealth, we all need to pay the correct amount of tax, and this data will allow us to ensure those people who can afford these kinds of items are doing the right thing, along with everyone else.”
The ATO will also be investigating if any capital gains were made off the items when they were sold. A prime example is fine art, which can rise in value when sold.
“With high-value assets like fine art, there can be some significant capital gains made when these assets are sold, and capital gains tax may need to be paid on the sale or disposal of these items,” Ms Jenkins said.