ATO Data Matching Protocols - Do you have a Lifestyle Asset?

ATO Data Matching Protocols - Do you have a Lifestyle Asset?
We want to bring your attention to the Lifestyle Assets data matching protocol launched at the end of August 2024 by the Australian Taxation Office (ATO).

If you purchase a lifestyle asset worth $65,000 or more and insure it with your insurance company, the insurance company is now obligated to report this data to the ATO.

The reason the ATO are using this data-matching protocol is to improve the compliance risk profiling of taxpayers and provide a holistic view of their assets and accumulated wealth.

What is a Lifestyle Asset?

Below is a list of assets (this is not exhaustive) and the minimum value of the assets that the ATO will begin with in their data matching program.

*Due to how some data providers classify assets they insure, the ATO may receive data about other types of motor vehicles and assets that are not listed in the motor vehicle asset class above.

The ATO are requesting information from up to approximately 800,000 taxpayers that insure their lifestyle asset worth $65,000 or more.

This is regardless of whether you have the assets in your own name or your business’s name. There is a list of all the insurers on the ATO website.

The ATO will see if this matches the income declared by the taxpayer and matches your ability to repay any ATO debts you may have.

Why are the ATO doing this?

The idea behind this is to identify a number of potential taxation risks including:

• omitted or incorrect reporting of income – taxpayers accumulating or improving assets with insufficient income reported in their tax returns to show the financial means to pay for them
• omitted or incorrect reporting of income and/or capital gains – taxpayers disposing of assets and not declaring the income and/or capital receipts on those disposals, or declaring them incorrectly
• incorrect claiming of GST credits – taxpayers may be purchasing assets for personal use through their business or related entities and claiming GST credits they are not entitled to
• omitted or incorrect reporting of FBT – taxpayers may be purchasing assets through their business entities and applying those assets to the personal enjoyment of an associate or employee giving rise to a fringe benefits tax liability
• use of assets by self-managed super funds (SMSFs) in breach of the law – SMSFs may be acquiring assets but applying them for the present-day benefit of the fund’s members or other related parties.

If you are found to be in breach of one of the above compliance issues, there may be penalties or you may lose your lifestyle asset. However, the ATO is intending to educate taxpayers with a goal of ‘prevention’ rather than ‘correction’.

If you are at all concerned or have any questions, please contact us on 03 8805 8000 to work through it.