Why is the ATO paying close attention to novated leases?
Novated leases have been thrust into the spotlight once again as the Australian Taxation Office (ATO) gears up to scrutinise them in its data-matching program for the 2023–2024 to 2025–2026 income years. This initiative, which began in 2021, involves collecting data from various fleet and leasing groups, including prominent names like McMillian Shakespeare Group, Smartgroup Corporation, SG Fleet Group, and more.
The data gathered encompasses a wide array of information, ranging from lessee and employee identification details to employer specifics and lease transaction particulars. It’s estimated that approximately 240,000 individuals will feel the impact of this data-matching endeavour each financial year.
But why is the ATO taking such a keen interest in novated leases?
The answer lies in their potential to uncover tax risks and compliance issues. By analysing this data, the ATO can identify instances where employers may be incorrectly claiming GST credits or where there are risks related to FBT compliance. Furthermore, the ATO can pinpoint cases where employees are erroneously claiming motor vehicle-related tax deductions.
Moreover, the insights gleaned from this data-matching program enable the ATO to offer tailored advice and guidance to taxpayers. This may manifest through online messaging prompts during the tax return process or targeted campaigns aimed at individuals with novated leases who have claimed work-related expenses on their tax returns.
In essence, the ATO’s focus on novated leases underscores its commitment to ensuring tax compliance and fairness across the board. As such, individuals and employers involved in novated leases should be vigilant about their tax obligations and ensure they accurately report their financial affairs to avoid falling foul of the ATO’s scrutiny.
It’s imperative to accurately report lease transaction details, navigate FBT obligations, and avoid claiming incorrect GST credits or work-related expenses. Given the intricate nature of novated leases and the ATO’s increased scrutiny, seeking expert advice is paramount.
We offer specialised guidance tailored to individual circumstances, helping clients navigate the complexities of novated leases with confidence. With our expertise, individuals can ensure compliance, maximise tax benefits, and safeguard against potential audit risks, providing peace of mind and financial security.
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About Sphere Accounting & Advisors-
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