ATO to focus on the car you drive in new plan to catch tax cheats

TAX officials will compare the income of millions of Australians with the type of car they drive in a hard-line new crackdown to catch cheats who hide their true wealth.

TAX officials will compare the income of millions of Australians with the type of car they drive in a hard-line new crackdown to catch cheats who hide their true wealth.

The surprise new strategy is designed to hunt down everyone from cash-in-hand tradies to money-laundering Ferrari drivers who sink money into cars to evade paying tax. Tax returns over three years will be checked against data from state and territory main roads’ departments.

On the hit list will be data on vehicles sold or bought where the purchase price or market value is equal or greater than $10,000.

Organised crime gangs with unexplained wealth often try to legitimise their money by buying assets, which they then sell legally. Other taxpayers claim they are on modest wages while owning one or more vehicles not commensurate to their earning power.

Tradies, who have high rates of cash-in-hand businesses, can hide true earning capacity by souping up work utes.

In some cases, wealth is hidden by structured ownership, such as front or holding companies, so the beneficial owner is screened from tax.

The Australian Taxation Office will obtain information about vehicles that have been transferred, or newly registered, from the 2016-17, 2017-18 and 2018-19 financial years

The ATO said the data matching program’s objective was primarily to identify and address noncompliance with tax obligations.

It said it also wants to:

■ Obtain intelligence about taxpayers who buy and sell vehicles to “identify risks and trends of noncompliance with taxation and superannuation obligations”;

■ Identify taxpayers buying and selling motor vehicles who may not be meeting their obligations and ensure the correct reporting of income; and

■ Identify taxpayers who have purchased vehicles with values that are not in line with the income they have reported.

The ATO estimated that the records of 1.5 million people would be obtained each financial year and “these records will be electronically matched with ATO data holdings to identify noncompliance with obligations under taxation and superannuation laws.”

Under the data grab, the ATO will receive information about how much the vehicle sold for, the market value of the vehicle and the vehicle’s garage address.