Property gains on taxman's hit list

Property investors are on the Australian Tax Office’s (ATO) radar for 2007-08, with the correct payment of capital gains tax (CGT) on property sales named as a top priority for the year ahead.

The ATO says it will closely monitor capital gains arising from the sale of property and shares, and will cross-reference data on millions of property transactions across the country to ensure investors are meeting their obligations.

"We continue to expand the use of data matching to identify under-reporting of capital gains," the ATO's Compliance Program report says. "We obtain information on asset transactions from state title and revenue offices."The Commissioner of Taxation, Michael D'Ascenzo, says the ATO is focused on educating people about their obligations.

"Capital gains can be a complex area for people so while we will take a firm approach with those who have not tried to meet their obligations, we want to help people get over the line," he says.

The ATO will write to people who appear to have made capital gains from property transactions, alerting them to their reporting obligations. It plans to examine 6000 at-risk CGT cases this financial year, "including taxpayers who made a gain from disposing of assets to invest in superannuation," the ATO says.

D'Ascenzo says data matching and information sharing are helping the ATO to form more sophisticated tax risk profiles of individuals and companies.

"This year we will identity match over 220 million records," he says. "At the same time, we are expanding our network of collaborative arrangements with third parties including government, regulatory bodies, private-sector organisations, law enforcement bodies and financial institutions.

"The message must be clear: our capacity to identify tax risk is being progressively enhanced." The main residence exemption will continue to receive scrutiny, D’Ascenzo says.

"Take the taxpayer who tried to claim a vacant warehouse as his main residence," he says. "We found the warehouse had no electricity, water or telephone connected and there was no heating or cooling, and indeed the family did not live there."

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source: rpdata.com