ATO Novated Leases Data-Matching Program

The ATO has renewed its focus on data-matching novated car leases with salary packaging providers.

A novated lease is a three-way agreement between an employer, employee and a novated lease provider where the employer takes on the obligation for repayments under the lease and a corresponding deduction is made from the employee salary.

Although the vehicle is privately owned by the employee it is treated as if it were a company vehicle.

The novated leases data-matching program will allow the ATO to identify and address several tax risks, including:

• Incorrect motor vehicle expenses claims – if an employee with a vehicle provided through a novated lease arrangement incorrectly claims motor vehicle related deductions
• Incorrect claiming of goods and services tax (GST) credits – the employer claims GST credits for paying the GST on purchase of the vehicle.
• Fringe benefits tax (FBT) compliance – a vehicle provided by novated lease is considered a fringe benefit to an employee and gives rise to an FBT liability for the employer. This liability can be reduced if the employee is making post-tax contributions.

Novated lease data will be collected from various fleet and leasing groups, including McMillian Shakespeare Group, Smartgroup Corporation, SG Fleet Group, Eclipx Group, LeasePlan, Toyota Fleet Management, LeasePLUS and Orix Australia.

The data will be collected annually by the ATO usually following the end of each March; however, it will also collect data periodically due to the large number of providers currently in the program.

The collected data will be retained for five years from receipt of the final instalment of verified data files from the providers. The ATO notes that this five-year period is required, as discrepancy matching requires the comparison of subsequent lodgments against the data extending over multiple financial years.

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