The Australian Taxation Office (ATO) has issued a policy notice stating its intention to continue its program of collecting motor vehicle registration data to assist with its tax compliance work in regard to both individuals and business taxpayers. Accessing this data will allow the ATO to cross check details of the sale and purchase of motor vehicles to ensure both businesses and individuals are complying with their relevant obligations in regard to personal and business income tax.
While it is not the role of Jade Finance to advise our customers on tax matters, that is the role of an accountant or tax agent, we feel this announcement was important to bring to the attention of our customers. This may be significant to some car buyers, particularly in relation to the asset depreciation measures including IAWO and temporary full expensing as introduced by the Federal Government in its response to the COVID-19 economic impacts.
The program provides the ATO with the resources to identify possible tax payers of interest through car purchases and sales. There are a number of taxation rulings which apply to motor vehicles including IAWO, fringe benefits tax, luxury car tax, GST, fuel rebate and tax schemes and the general tax deductibility of eligible vehicles and eligible elements of the car finance.
ATO Data Matching Program
While this latest policy notice is relevant with the new taxation measures currently available, the program has been in operation for over 16 years in one way or another. The current announcement states the ATO’s intention to continue the collection of car registration data for 2019/20, 2020/21 and 2021/22 financial years.
The ATO matches data as supplied via the motor registry authority in each state against their records for taxpayers. The intention being to identify individuals and businesses that are not meeting their reporting, lodgement and payment obligations. It also assists in identifying undeclared income by taxpayers. As an example, if you purchase a $100,000 motor vehicle and have a declared income of say $20,000 that can be a red-flag to the ATO. In ATO wording, it identifies buyers of vehicles with purchase price which is not ‘commensurate with their reported income.’
The program can identify taxpayers that may not meet their obligations in lodging BAS and making the relevant payments and input tax credits.
Data is collected for both transfer of registration and registrations of new vehicles with purchase price/market value of $10,000+.
The ATO states that this program assists with compliance activities but it also supports programs operated by the department investigating the black economy. It also adds the purpose to educate and deal with businesses and individuals identified as failing to meet obligations.
The ATO is working with state motor vehicle authorities and will be collecting details in regard to the purchaser, the seller, fleet manager, licensed motor vehicle dealer, leasing company and the person registering the vehicle.
Data will include name of individual or business; address(es) and contact details; date of birth; ABN and ACN where relevant.
Transactional data collected will include the date and type of transaction; vehicle sale price; vehicle market value; garaging address for the vehicle; intended use of the vehicle (private/business); make/model/year of manufacture; engine capacity; tare weight; gross weight; rego number; VIN; stamp duty details; transaction receipt; dealer licence.
As you would expect from a government body, all data collection and storage is in line with privacy and other regulations.
Car Finance and Taxation
If you claim aspects of the purchase or running expenses of your motor vehicle for tax purposes you may choose to review the full details of the ATO policy.
All the commercial finance facilities offered by Jade for the purchase of business vehicles by business entities have a tax benefit element. But each loan product – Chattel Mortgage, Leasing and CHP – derive that benefit or deduction at different stages.
With Leasing, the repayments are a tax deduction whereas with Chattel Mortgage the interest is tax deductible but the deduction on the vehicle purchase is realised via depreciation of the asset in the end of year accounts.
When GST is claimable on the purchase/finance of a motor vehicle also differs with the loan type. Refer to our individual web pages for full details.
The personal car loan products offered by Jade, the Secured Car Loan, does not by its structure or format have tax-related aspects. If an individual uses their privately purchased and registered vehicle in carrying out their job or work, any compensation for that use would need to be discussed and arranged with an employer or tax agent.
We refer you to our Novated Car Lease with Salary Sacrificing loan product as an option for employers looking to provide a vehicle for an employee.
If you have any tax-related matters in regard to your motor vehicle, we advise that you consult with your financial advisor, accountant or tax agent. As we stated at the outset, as your lender, it is not the role of Jade Finance to provide taxation advice to our customers. But we do outline the features and benefits of each of our finance products and can provide additional elaboration and explanation.
To discuss a motor vehicle or any other finance, contact Jade Finance Call 1300 000 008
DISCLAIMER: INFORMATION, CONTENT, DATA, REFERENCES AND HINTS CONTAINED IN THIS ARTICLE ARE INTENDED PURELY FOR GENERAL INFORMATION AND NO LIABIILTY FOR ERRORS OR SIMILAR IS ACCEPTED. THE INFORMATION IS NOT INTENDED TO FORM THE SOLE BASIS FOR FINANCIAL DECISIONS. ANY READER CONSIDERS THAT MAY REQUIRE ADVICE ON THEIR PERSONAL OR BUSINESS FINANCIAL SITUATION, THEY ARE ADVISED TO SEEK THE PROFESSIONAL ASSISTANCE OF A FINANCIAL ADVISOR.