The announcement by the Australian Taxation Office yesterday they are targeting 600,000 Australians who have purchased a motor vehicle valued at over $57,009 has sent shock waves through the Australian luxury automobile industry as well as aspirational voters who turned to Kevin Rudd at the last election.
Known as the Luxury Vehicle Data Matching Project, the ATO will match the data provided by every State and Territory motor vehicle registering bodies against the Tax Office’s taxpayer records. It comes hot on the heels of the budget announcement that tax on luxury vehicles would be increased from 25 to 33 per cent.
A luxury vehicle pilot study in 2006 found almost 25 per cent of identified taxpayers had at least one outstanding income tax return between 1997 and 2005. The tax office is hopeful of snaring at least 150,000 cheats in the new project. But the non lodgement of tax returns is not the sole reason they are now going to a full blown audit of high-end vehicle purchasers.
The real reason they are expanding the pilot project is compliance reviews intended to establish whether income has been omitted from income tax returns and/or business activity statements have shown omitted income in identified cases is substantial.
In other words, they have identified many cheats in the pilot project that have not declared all their income and the omissions are so great that the ATO now want to go all around Australia to snare the lot so consolidated revenue will be bulging with lots of cash. Operation Wickenby – eat your heart out!
My information is that many caught up in the funny money game of the pilot project are builders, bricklayers, plumbers and other small business taxpayers like shop owners. The old cash economy rears its head again. Make no mistake, this latest project by the ATO is not about enforcing lodgement of tax returns; it’s about tax evasion.
The Swan budget also imposed a $150,000 limit on eligibility for the baby bonus, family tax benefit part B and the dependent spouse tax offset. Is Labor saying that if you earn $150,000 pa and buy a car worth $57,009 then you are rich? It doesn’t seem that long ago that a certain labor leader said:
I believe in an upwardly mobile society where people can climb the rungs of opportunity to a better life for themselves and their family. I believe in hard work and reward for effort. I believe in a Government that is there to help people who are doing the right thing — the people who are getting stuck in, doing things the fair dinkum Australian way.
All power to ATO I say, I wholeheartedly support their efforts. Taxation is the keystone to maintaining our democratic society; those evading this responsibility should be targeted. It’s illogical to have tax laws in place but then complain when the agency responsible for enforcing these laws does so.
Actually I think the government is saying that if you earn about 3 times the average wage you don’t need government support by way of welfare payments – I don’t see how this means you are rich, it just means you don’t need handouts.
The tax office is just doing their job, if people are dodging their taxes then they are ripping the rest of us off – if the tax office has noticed a correlation between car purchases and tax evasion then good on them for doing their job and following it up – the only people who will get hurt are those not paying their taxes. Or are you suggesting that somehow being able to afford a luxury car somehow excuses tax evasion? If you operate in a cash environment, there is always the risk of getting audited, and if you have been evading tax (hence increasing the burden on the rest of us) and are audited you will get caught … I don’t see how this is some sort of government blow against climbing the rungs of opportunity.
Bravo Michelle. The fact that Crikey is now joining the popular press in defending with dumb argument, really, really dumb argument, those who earn more than $150 000 is an abberation, I hope. I read Crikey for quality content, not ridiculous commments such as those by Chris Seage. There’s a job for you in the Adelaide Advertiser, Chris, interviewing the Tanners of this world.
If this is the way to get people to pay their tax then go for it. Rich is always relative – ask the people in Burma.
Is Labor saying that if you earn $150,000 pa and buy a car worth $57,009 then you are rich?
No, just insane.
Spend a third of your income just on a car? (Plus another hunk of income using it?) Unless cars are the joyous obsession of your life (in which case go for it), you need testosterone reduction and / or financial counselling.