compliance matters

Compliance Matters – What is the ATO Targeting?

Lifestyle Assets

Do you own “lifestyle assets” such as an expensive car, fine art or a boat? If so, the ATO may be checking to see that your declared income can support your lifestyle. 

The ATO is using its extensive powers and has instructed over 30 insurance companies (targeting approximately 350,000 people) to provide information on clients with any of the following assets: 

  • aircraft valued in excess of $150,000;
  • marine vessels valued in excess of $100,000;
  • fine art valued in excess of $100,000 per item;
  • motor vehicles valued in excess of $65,000; and
  • thoroughbred horses valued in excess of $65,000. 

The ATO does have power to raise default assessments to taxpayers and then it is generally up to the taxpayer to discharge the onus proof to challenge that assessment.  We continue to stress the importance of keeping transparent and accurate records to our clients so that in the event of audit or investigation the taxpayer can easily explain the disclosures they have made.

Director Liability and Identification

A new regime requiring company directors to have a unique identification number – a director identification number (DIN) – is on the way. The purpose of the DIN regime is to assist regulators and external administrators to investigate a director’s involvement in what may be repeated unlawful activity including illegal phoenix activity.

Phoenixing occurs when the controllers of a company deliberately avoid paying liabilities by shutting down an indebted company and transferring its assets to another company. The Government estimates that the total cost of phoenixing to the Australian economy is between $2.9 billion and $5.1 billion annually.

The DIN will require all directors (but not “shadow directors”) to confirm their identity and it will be a unique identifier for each person who consents to being a director. The person will keep that unique identifier permanently, even if they cease to be a director.

The new DIN regime won’t commence until administrative arrangements supporting the new regime are in place. This will take up to 2 years (hence a faraway DIN). Persons who are existing directors when the new regime begins will be given time (yet to be determined) to apply for a DIN.

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