That release was a little short on detail as the ATO had not formalised their strategy, but we did promise that we would update the industry when further information came to hand. Well I'm back for this very purpose as the ATO have now issued a document titled 'Lifestyle Assets Data Matching Program Protocol' , which goes into greater detail re this project, to the extent that it names the insurers it will be approaching and what "asset value threshold" (i.e. sum insured) of the racehorse data it will be collecting.
To put it bluntly, this data matching project should be a warning for wealthy racehorse owners that, with greater compliance resources, the ATO means business and that getting their tax affairs in order is highly recommended (refer 'risk' areas below) as many who have insured their interest in a high cost racehorse can be expected to be caught up in this project.
Overview
The ATO will obtain information on insurance policies for certain 'lifestyle' assets, including marine vessels, enthusiast motor vehicles, thoroughbred racehorses , fine art and aircraft.
In the words of the ATO, "…this data will improve our profiling of taxpayers and provide a more comprehensive view of their assets and accumulated wealth." In simple English, they want to find out about the income, wealth and tax compliance of rich guys who race horses!
This data matching program will allow the ATO to identify and address a number of taxation 'non-compliance' areas, including:
Asset betterment - taxpayers accumulating or improving assets but not including sufficient income in their taxation returns to show the financial means to pay for them
Income tax and capital gains – owners disposing of horses and not declaring the revenue and/or capital gains on those disposals. This applies to those in a horse business and 'hobbyists'
GST - taxpayers may be purchasing assets for personal use through their business or related entities and claiming input tax credits they are not entitled to
Fringe benefits tax - taxpayers may be purchasing assets through their business entities, but apply those assets to the personal enjoyment of an associate or employee giving rise to a fringe benefits tax liability
Superannuation funds - self-managed superannuation funds may be acquiring ineligible racehorses that are being put to their own 'personal use'
How the data will be used
The data that the ATO gathers will not be used to directly initiate compliance activity, but it will be made available to designated ATO officers to assist in their profiling of taxpayers selected for audit and review activities. The existence of an insurance policy for a racehorse may prompt the ATO officer to "pursue a particular line of enquiry".
Insurers approached for policy data
In a quite unprecedented move, and to illustrate the greater compliance powers now available to them, the ATO have publicly released the names of the insurers it will be approaching to collect data, these being:
Affinity Equine Insurance Solutions
AIG Australia Ltd
Allianz
AON
Associate 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
QBE Insurance (Australia) Ltd
RAA
RACWA
RACQ Insurance Ltd
RACV
Shannons
Suncorp Metway Insurance Ltd
Wesfarmers General Insurance Ltd
Westpac
YOUi
Zurich
If you're curious as to whether you are caught up in this latest project, the ATO have advised insurers that they can notify their clients of their participation in this program and provide them written materials to assist with this.
In terms of privacy, the insurers have been advised to update their privacy policies to note that personal information is disclosed to the ATO for "data matching purposes".
Data fundamentals
Data will be sought from the above insurers for racehorses insured for greater than $65,000 .
The ATO will be obtaining information from the above insurers for the 2013-14 and 2014-15 financial years.
In relation to individual racehorse owners, the ATO will be seeking:
Given and surname(s) (if more than one name on the policy)
Date of birth(s)
Addresses (residential, postal, other)
Australian business number (if applicable)
Email address
Telephone numbers
For non-individuals (e.g. companies or trusts), the ATO will be seeking:
Legal and trading names
Addresses (business, postal, registered, other)
Australian business number and/or Australian company number
Contact name
Contact phone
Contact email address
Policy details
Policy number
Policy inception date
State date of current policy
End date of current policy
Total value insured
Purchase price of the property insured
Registration number or identification number of the property
Insurance category
Description of the property insured
Physical location of the property
Number of records
As we indicated in our initial release, the ATO anticipate obtaining records of more than 100,000 policies, many of which will be held by individuals.
Please contact me if you wish for me to clarify or expand on any of the matters raised in this article.
Prepared by:
Paul Carrazzo CPA
Carrazzo Consulting CPAs
801 Glenferrie Road, Hawthorn, VIC, 3122
TEL: (03) 9982 1000
FAX: (03) 9329 8355
MOB: 0417 549 347
E-mail: paul.carrazzo@carrazzo.com.au
Web Site: www.carrazzo.com.au
Paul Carrazzo CPA
Carrazzo Consulting CPAs
801 Glenferrie Road, Hawthorn, VIC, 3122
TEL: (03) 9982 1000
FAX: (03) 9329 8355
MOB: 0417 549 347
E-mail: paul.carrazzo@carrazzo.com.au
Web Site: www.carrazzo.com.au
