ATO Matching Car Sales Data: Tax Compliance

If you have purchased a vehicle for business or private use in the past few years or are planning to do so in the next few years, you may be interested in a policy notice that was recently issued by the Australian Taxation Office (ATO). The notice states the intention of the ATO to continue the data matching program for motor vehicles. The ATO accesses data from the states regarding motor vehicle sales and purchases and cross-checks that against their taxation records. The program assists the ATO in their tax compliance operations for both business taxpayers and individuals.

While Jade Car Loans updates and informs customers of tax measures such as Instant Asset Write-Off and the tax benefits of the finance products we offer, the role of advising on individual tax issues is for tax agents and accountants. If this ATO policy notice affects you, you should refer to your tax advisor.

Through the data on car regos, purchases and sales, the ATO program enables the authority to identify ‘taxpayers of interest’. Tax rulings applying to motor vehicles include GST, fringe benefits tax, IAWO, tax deductions in general, luxury vehicle tax, fuel rebates and other schemes.

ATO Vehicle Data Match Program

The policy notice was recently released but it pertains to an ongoing program that the ATO has been operating in one form or another for the past 16 years. In the recent notice, the ATO is outlining its intentions to continue the data matching programme for 2019/20 through to the 2021/22 financial years. The program involves the ATO collecting car rego data from the state motor and road departments and authorities.

The authorities provide the ATO with details of vehicle sales/purchases and registrations which the ATO can then match against their taxpayer records. According to the ATO statement, the program intends to identify both businesses and individuals that are complying with their obligations regarding lodgement, payment and reporting according to the relevant tax rulings.

In addition, through this data, the ATO can identify undeclared income. If data reveals a taxpayer purchased a very high priced vehicle but only declared a very small income, this would be of interest to the ATO. In official terms, vehicle purchases are not ‘commensurate with reported income’. The ATO has also stated the importance of the program in identifying the black economy.

For businesses, the ATO would be looking at lodgement and payment of BAS and the correct claiming of GST and input tax credits regarding their vehicles, fringe benefits and other issues. The ATO will also be using the data to look closely at the use of the IAWO and other tax measures. The program involves data collection for new vehicle registrations and transfers of rego for vehicles with a price or market value exceeding $10,000.

Collection of Data

The program of data collection involves the ATO working with the state and territory motor authorities that hold details of motor vehicle sales and registrations. Details on the seller, purchaser, vehicle dealer, fleet manager, leasing company and entity/person registering the car are collected. Specific details include name, address, contact details, DOB, ABN/CAN around the individuals and businesses.

Details about the transaction itself are also collected. This includes date and type, vehicle price and market value, business or private use, dealer’s licence, stamp duty and receipt.

Details around the vehicle are also collected. This includes the make, year, model, VIN, gross and tare weight, engine capacity and registration number.

Tax and Motor Vehicles

When purchasing a vehicle for business use, Jade offers a complete portfolio of business car finance products to suit a wide range of business structures, sizes and types. These products include sole trader car finance, Leasing, Commercial Hire Purchase and Novated Car Lease with Salary Sacrificing. Each of these facilities includes tax compliance elements by way of tax deductions and GST obligations.

We outline these in detail on our web pages and advise customers to refer to their own accountant or financial advisor in selecting the finance product for their purchase.

As an overview, with car leasing, the monthly payments are treated as a tax deductible expense while those purchasing with a Chattel Mortgage claim a tax benefit on business vehicles through depreciation of the vehicle as a business asset in line with ATO rulings.

GST applies to vehicle purchases. Business buyers who are registered for GST can claim the GST on the relevant BAS statement in line with the relevant rulings applying to each finance type.

If purchasing a vehicle for private use with a Jade Secured Car Loan, a tax benefit is not identified in this type of loan or purchase. If a private buyer does use their vehicle for work purposes and is seeking a tax deduction or compensation that would be an employer-employee issue and/or a discussion to be had with your tax agent.

Reference Resources

For full details on the recent ATO policy notice head to https://www.ato.gov.au/General/Gen/Motor-vehicle-registries---2013-14-to-2021-22-financial-years-data-matching-program-protocol/ and for advice on your taxation obligations regarding your specific business or vehicle purchase, refer to your accountant.

To discuss your car finance requirements call Jade Car Loans at 1300 000 003

DISCLAIMER: THE DATA, POLICIES, INFORMATION, CONTENT AND REFERENCES AS PRESENTED IN THIS ARTICLE ARE FOR GENERAL PURPOSES ONLY AND ARE SOURCED FROM RELIABLE SOURCES BUT NO LIABILITY IS ACCEPTED SHOULD THERE BE ERRORS OR MISREPRESENTATIONS OF DETAILS IN THE CONTENT. THIS INFORMATION IS NOT INTENDED AS THE SOLE PURPOSE OF MAKING FINANCIAL DECISIONS. READERS SHOULD REFER TO A FINANCIAL ADVISOR OR ACCOUNTANT IN THE EVENT THAT THEY REQUIRE PROFESSIONAL GUIDANCE AND CONSULTATION ON THEIR INDIVIDUAL FINANCIAL POSITION.