24/10/2024
ATO data matching lifestyle assets and your business for 2023 to 2026
The Australian Taxation Office (ATO) will acquire lifestyle assets data from insurance providers for the period July 2023 to June 26. Insurance policy data will be collected for the following classes of assets, where the asset value is equal to or exceeds the following nominated thresholds:
1) caravans and motorhomes: $65,000;
2) motor vehicles including cars and trucks in addition motorcycles: $65,000;
3) thoroughbred horses: $65,000;
4) fine art: $100,000 per item;
5) marine vessels: $100,000; and
6) aircraft: $150,000.
It is estimated by the ATO that the total number of policy records obtained will be approximately 650,000 to 800,000 each financial year. We expect 250,000 to 350,000 matched records will relate to individuals.
The ATO has used this for identifying and address a number of taxation risks that some businesses make a number of common mistakes when accounting for the mixed business and private use of an asset, including:
a) 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;
b) 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;
c) 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;
d) 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; and
e) 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.
Please review how did you treat your business’s assets and you must understand the tax and FBT implication on mix use between business and private usage. Please note that you can only claim deductions against business income for expenses associated with business use of your assets so you will need to be able to apportion the private use of an asset and exclude that from your calculation. An addition, FBT liability can arise for the business and your employee if you have assets that are used by an employee or an associate for private purposes, and that needs to be accounted for.
Please consult your accountant if you are not sure of correctly apportion relevant deduction to your business!
