The ATO's January announcement that it will be taking a much closer look at an individual's assets by conducting data matching exercises with insurance companies may well give owners of undeclared fleets of vintage cars or those guilty of stashing several 'old masters' in the attic some sleepless nights.

A spokeswoman for the ATO told the media that it had given tax agents "advance notice of plans to expand our data-matching activities to enhance profiling, especially of the wealthy". Insurers can expect to shortly receive notices giving details of those individuals who may be of interest. Its aim, the ATO says, is to ensure wealth estimates are accurate and that tax obligations are met.

But just what is the definition of wealthy these days? Well, according to the ATO it's those who, together with their business associates, control net wealth of $5M or more. The range of asset classes being put under the microscope has expanded and will now include:

The practice of data matching by the ATO is nothing new; it's been conducting such activities for many years in an effort to improve the quality of data it holds, help uncover and reduce fraud, and encourage better levels of compliance by individuals and businesses.

  Is there a sudden focus on the wealthy, however? As you'd expect, the rich have always been of interest, but it's only in comparatively recent times that technology has allowed the ATO to more effectively join up the dots. Of recent years, it has set in its sights those deemed to be 'very wealthy' (those with more than $30 million), contacting them for further asset information. In the 2014-15 tax year alone, more than $2.1 billion in liabilities and $1 billion in cash collections was raised as a result.

  Controversially, the ATO issued a 'last chance amnesty' in 2014 to encourage tax cheats to supply details of previously undeclared hidden assets and income without risk of the usual penalties, and with the assurance that no further investigation ­ criminal or otherwise ­ would occur. In excess of $127 million in tax collections was raised by Project Do It, as it was called, and the ATO remains confident that this amount will continue to rise. Additionally, more than 5800 disclosures as part of the amnesty were made, which meant more than $5 billion in assets declared and more than $600 million of omitted income being disclosed.

  Data matching has also been used for some years now as a way of keeping tabs on the massive growth in online businesses that sold goods or services with a total value of more than $10,000, beginning with the 2011-12 tax year. This included those who didn't see themselves as businesses per se , such as individuals selling through eBay, Gumtree and the like. 

  Other data matching programs the ATO continues to run include those targeting Childcare Services and Educator Payments, as well as taxable payments and government grants. Once again, the idea is to ensure records are correct, tax is paid where it should be and that voluntary compliance is encouraged as much as possible.

  So, how many people will be affected by this latest announcement regarding data matching of assets listed with insurance companies? The ATO is expecting to initially receive approximately 100,000 records on the new asset classes alone. And, as you would expect, if an individual is of interest, investigations will be no doubt be thorough. It would be wise, therefore, not to underestimate the power of these programs to detect failures in tax compliance or risk facing the consequences.

  For professional and up to the minute advice on your personal situation in this regard, contact the KDA Group on 02 4861 8383 and speak to one of our consultants.