The ATO may look into your tax returns closely if you own investment property or have expensive assets like yachts, jets, expensive artwork, or other assets. The ATO developed two data-matching projects to specifically target individuals who possess high-value lifestyle products and investment properties. 

These initiatives are designed to ensure that taxpayers accurately declare ownership, income, and other relevant details regarding these assets.

Investment Properties

When it comes to investment properties, the ATO has always been quite interested in what property owners record and claim on their personal tax returns. To widen this emphasis, the ATO recently launched more data-matching activities. 

These programs build on past studies that looked at landlord insurance and financing for residential investment properties. The ATO is now pulling data from property management software for FY 2018–19 through to 2025–26 in an attempt to gather comprehensive data. 

This data collection contains vital details about property owners, such as names, addresses, phone numbers, dates of birth, and even email addresses. Additionally, company names and Australian Firm Numbers (ABNs) are collected if applicable.

The data matching program takes one step further by scrutinising the attributes in detail. Among the documents gathered are the addresses of the properties, the first dates they were listed for rent, and the contact details of the property managers, including their ABNs and licence numbers. 

Bank details of property owners are also being gathered in order to give the ATO a complete picture of each investment property and the transactions associated with it. These transactions include the beginning and ending dates of rental periods, transaction amounts and descriptions, and account balances for rental properties.

Since July 1, 2016, state and territory administrations have been giving the ATO data on property transfers. These organisations are required to submit data on real estate transactions on a quarterly basis. 

By matching the data with tax returns, the ATO can identify landlords who fail to record rental property schedules, omit or report revenue and deductions related to rental properties incorrectly, or fail to accurately pay capital gains tax (CGT) when they sell their homes. The program’s objective is to identify landlords who may, intentionally or inadvertently, be underreporting these important financial details.

Lifestyle Assets

The ATO now prioritises high-value lifestyle assets over investment homes. These days, insurance company data may be used to cross-reference and track the ownership of assets such as luxury cars, horses, caravans, and campers. 

Other assets targeted include fine art valued at more than $100,000 per piece, marine vessels valued at $100,000 or more, and planes valued at more than $150,000. The large quantity of information obtained from insurance companies comprises the purchase price of the asset, the intended use of the item, and personal information about the policyholder. 

With the use of this data, the ATO is able to compare what individuals really own and are insured against what they declare on their tax forms.

The ATO’s mission is to find any form of discrepancy. To potentially save money on taxes on these pricey products, they are initially looking for circumstances in which people fail to declare ownership of these lifestyle goods on their tax returns. In other cases, the ATO focuses on those who sell these assets but fail to disclose the corresponding income or capital gains. A common issue is incorrect claims of goods and services tax (GST) credits for these assets. If someone claims GST credits to which they are not legally entitled, taxes may be underpaid.

The ATO is particularly concerned about business assets that are mishandled for personal benefit. Fringe benefits tax (FBT) is imposed when an employee or owner utilises a business asset for personal use. When FBT is either underreported or not declared at all, the ATO is closely monitoring those cases. For example, if an aircraft or boat owned by a company is used for personal travel by its owner, this use must be declared and FBT must be implemented. 

In conclusion, the ATO is putting in more efforts to ensure that individuals and businesses accurately disclose their assets and income. Regardless of whether you own investment properties or high-value lifestyle assets, it’s imperative that all relevant data is appropriately recorded on your tax returns. 

Misreporting can have serious consequences, including audits, penalties, and unpaid taxes, whether it is intentional or not. The ATO uses advanced data-matching technologies to identify discrepancies and verify compliance with Australia’s tax laws.

If you have any questions relating to investment properties, lifestyle assets or company assets, feel free to discuss with us.