The Australian Taxation Office (ATO) has increased its focus on lifestyle assets such as boats, classic cars, luxury vehicles, and even aircraft. If you own or use these assets through a business or trust, the ATO may already be watching closely. This ATO lifestyle assets crackdown is aimed at identifying cases where personal-use assets are incorrectly claimed as business expenses. Many taxpayers believe they are compliant, but small mistakes or misunderstandings can trigger audits, penalties, or back taxes. In this blog, we explain why lifestyle assets are under scrutiny, what the ATO is looking for, and how you can protect yourself by staying compliant.
Lifestyle assets are high-value items that are often used for personal enjoyment but may be owned by a business, company, or trust.
Common lifestyle assets include:
The ATO considers these assets high-risk because they are easily used for private purposes while being claimed as business-related.
The ATO uses advanced data-matching technology to track ownership, usage, and expenses linked to lifestyle assets. This allows them to compare tax claims with actual behaviour.
The main reasons for the crackdown include:
With rising compliance efforts, lifestyle assets have become a key audit target. If you need help reviewing deductions and compliance, explore Tax Solutions or Small To Medium Business Advisory.
Many people assume the ATO will not notice small mistakes. In reality, the ATO gathers data from multiple sources.
These include:
If the data does not match your tax claims, it can raise red flags.
Boats are one of the most common lifestyle assets flagged by the ATO. While some businesses genuinely use boats for charter, fishing, or tourism, many are mainly used for personal enjoyment.
Common ATO concerns include:
If your boat earns little income but has high expenses, the ATO may investigate. For guidance and updates, see ato.gov.au.
Classic cars and luxury vehicles are another major focus of the ATO lifestyle assets crackdown.
Issues often arise when:
Without proper records, the ATO may deny deductions and apply penalties. If you reimburse expenses or manage reporting, review Bookkeeping & Payroll processes to ensure records match claims.
The biggest problem is misunderstanding the difference between business and personal use.
You can only claim:
If an asset is used 80% personally and 20% for business, you can only claim the 20% portion.
Claiming 100% when personal use exists is one of the fastest ways to attract ATO attention.
The ATO looks for patterns that suggest misuse.
Some common red flags include:
Even small inconsistencies can lead to deeper investigations.
Good records are essential if you own lifestyle assets.
You should keep:
Records should clearly show how and when the asset is used for business purposes.
Poor documentation often results in denied deductions.
If the ATO identifies incorrect claims, the consequences can be serious.
Possible outcomes include:
In severe cases, legal action may follow.
You can reduce your risk during the ATO lifestyle assets crackdown by following best practices.
Simple steps include:
Being proactive is always better than reacting to an audit.
If you already own a boat, classic car, or similar asset through a business, now is the right time to review your tax position.
Ask yourself:
A review can help fix issues before the ATO contacts you.
Tax rules around lifestyle assets can be complex. A tax professional can help you:
Professional advice can save money and stress in the long run.
The ATO lifestyle assets crackdown is not something to ignore. Boats, classic cars, and luxury items are under the microscope, and the ATO has powerful tools to detect misuse.
If you own lifestyle assets through a business or trust, ensure your tax claims are accurate, supported, and compliant. Honest reporting, clear records, and professional guidance are the best ways to stay protected.
Taking action now can help you avoid audits, penalties, and unexpected tax bills later.
TASC provides a one-stop solution for all your needs. Our associates, Wise Financial Advisors, offer comprehensive financial planning services.
