The ATO have been significantly investing in database matching to identify taxpayers who may not be declaring all of their income.
The classic way was to look at the asset purchases of low-income taxpayers, to see if there is an inconsistency – for example, if a taxpayer declares a taxable income of $20,000, and that same taxpayer has a $1M luxury boat and a new Ferrari, then the ATO will assume the taxpayer has not declared all of their income.
It seems the ATO felt some taxpayer’s’ assets were hard to identify – for example if the assets were purchased in the name of an asset entity (for example).
This likely explains why the ATO have launched into sending notices to insurance providers to get THEIR records.
They are focused on anyone who has insured their boat, aircraft, art, horse, or enthusiast vehicle.
It is said that this will provide them with a accurate estimate of tax practitioners’ clients’ wealth, to help the ATO to provide tailored services and ensure clients meet their tax obligations.
The ATO state that they expect to receive 100,000 records where the different asset classes meet certain threshold amounts.