Do your lifestyle tastes extend to fine art or thoroughbred horses? The ATO is interested too…

The ATO regularly collects information about certain categories of lifestyle assets, using data extracted from insurance policies. It singles out assets with values exceeding:

This information is generally used by the ATO when identifying audit targets, particularly under what could loosely be termed as its 'cash economy' audit program. They use this data to compare with personal income, and identify those who may seem to be living beyond their means.

In a same-but-different example, an individual taxpayer was denied relief from a tax debt on grounds of serious hardship.

The taxpayer was unable to work due to injuries suffered whilst at work and her husband has suffered health issues and a subsequent reduction in his income.

They applied for relief from an $18,000 tax debt on grounds of serious hardship.

Upon scrutiny, it was found they had incurred significant discretionary spending, including the purchase of a new car for $37,500, a European trip for herself and her family and the provision of financial assistance to other members of her family.

The taxpayer was denied tax debt relief, because they had demonstrated: "… a willingness to put personal discretionary spending ahead of her obligation to the Australian community to pay her tax liabilities…"

Reference: SYRF and Federal Commissioner of Taxation (2021) AAT 1845

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