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.

Peter Fray

Inoculate yourself against the spin

Get Crikey for just $1 a week and support our journalists’ important work of uncovering the hypocrisies that infest our corridors of power.

If you haven’t joined us yet, subscribe today to get your first 12 weeks for $12 and get the journalism you need to navigate the spin.

Peter Fray
Editor-in-chief of Crikey