Contact: Gavin Clancy
Deloitte
Communications Manager
+61 3 9208 7759

Contact: Sarah Lane
Deloitte
Tax Partner
+61-3-9208 7081

Investors who have reaped the benefits of rising property and equity prices in the past year face heavy targeting by the Australian Taxation Office for capital gains tax compliance, according to Deloitte.

Deloitte says the ATO is laying down the law to investors in a recent bulletin* outlining the focus of its tax compliance program.

Deloitte Partner Sarah Lane said the ATO had beefed up its ability to identify capital gains risks, especially in the area of residential property and share transactions.

“Property investors can face plenty of Tax Office surveillance on realised capital gains. The ATO openly admits to having greater data matching capability in areas such as property and share disposals,” she said.

“Significantly, the ATO is now warning that it will match property sales, as recorded by the State revenue offices, against net capital gains recorded by taxpayers.”

Ms Lane said the ballooning property prices over the last five years were ripe for the picking by the Tax Office.

“Under its new data-matching initiatives, the ATO can identify sale price trends and isolate likely areas of risk of under-disclosure. For example, it has been actively auditing sale results of high value/high growth Gold Coast properties,” she said.

“For share investors, the ATO has signalled a major campaign, including a pilot program that matches data from share registries against net capital gains in return forms and CGT schedules.

“It’s essential therefore those investors maintain watertight records to track all capital gains. Poor record keeping practices will prove totally inadequate against the ATO’s data-matching capabilities. 

“What remains to be seen is whether the ATO will make educated inquiries when it comes to expatriates, for whom CGT laws are particularly complex.

“That’s because Australian tax law has rare concepts of deemed values for people who change residency, in which case the data-matching activities could prove irrelevant and a sorry waste of resources,” Ms Lane said.

* ATO website, ‘Compliance Focus in 2004/5’