Novated leases data overview
The Australian Taxation Office (ATO) has a responsibility to protect public revenue and maintain community confidence in the integrity of the tax system. Our novated leases data-matching program will help us mitigate loss of government revenue.
The data collected under this program will support the identification, assessment, and treatment of motor vehicle expenses and GST risks.
Education and online services
Novated leases data may be used to initiate nudge messaging to taxpayers and tax professionals through online services at, or before the time of lodgment.
This messaging will appear for taxpayers identified in the prior financial year and it will inform the taxpayer that motor vehicle expenses under a novated lease arrangement are not tax-deductible.
The nudge messaging will be available for:
- tax professionals through messaging in
- Online services for agents
- Practitioner Lodgment Service (PLS) through Standard Business Reporting (SBR) enabled software
- individual self-preparers through myTax, specifically
- label D1 – work related car expenses (prompts the taxpayer through online messaging when completing a return)
- label D2 – work related travel expenses (prompts the taxpayer through online messaging when completing a return).
Data analytics and insights
The data helps us:
- inform individuals with novated lease arrangements of their tax obligations as part of an information and educative campaign
- identify relevant cases for administrative action including compliance activities and educational strategies
- after a return is lodged, if we need to verify a discrepancy, we'll contact the taxpayer by phone, letter or email
- before we take any administrative action, the taxpayer will be able to verify the accuracy of the information we hold. They will have 28 days to respond before we take administrative action associated with novated lease data use
- avoid unnecessary contact with individuals who are correctly reporting and claiming motor vehicle deductions
- use insights to design ways to make it easier for our clients to interact with the system and get their affairs right.
Previous related programs
The ATO has been conducting the novated leases data-matching program since June 2021.
This protocol outlines our intention to continue collecting novated leases data from the 2023–24 to 2025–26 financial years.
Previous data-matching programs have broadly achieved their stated goals in identifying candidates for review and audit, who may be failing to meet their registration and lodgment obligations, including assisting them to comply.
We are using the collected data to provide tailored advice and guidance to individuals on the tax implications of their novated lease.
We prompt taxpayers through online messaging when completing their return and prompter campaigns after lodgment to clarify that novated lease work related expenses should not be claimed on their tax return.
The data helps us to:
- understand the level of risk that novated leases pose to the tax system
- measure the effectiveness of treatment programs targeting novated leases.
In 2022 our low touch prevention strategy for clients with a novated lease resulted in a net decrease in the number of claimants at D1 of 41% and 17% for self-preparers and Tax Agent clients respectively, compared to the control group.
Data providers
The ATO is the matching agency and the sole user of the data obtained during this data-matching program.
We may obtain data from lease companies and their subsidiaries, including:
- McMillan Shakespeare Group
- Smartgroup Corporation
- SG Fleet Group
- Eclipx Group
- LeasePlan
- Toyota Fleet Management
- LeasePLUS
- Orix Australia.
Eligibility as a data provider
We adopt a principles-based approach to ensure that our selection of data providers is fair and transparent.
Inclusion of a data provider is based on the following principles:
- Provider information allows us to materially increase (or sustain) our visibility over novated leases in the Australian market.
- The data owner or its subsidiary operates a business in Australia that is governed by Australian law.
- The data owner provides novated leases to individuals.
- The data owner provided novated leases for the years in focus.
- The data is integrated, centrally located and able to be extracted using database querying techniques.
If the client base of a data provider does not present a risk, or the administrative or financial cost of collecting the data exceeds the benefit the data may provide, the data owner may be excluded from the program.
The data providers for this program will be reviewed annually against the eligibility principles.
Our formal information gathering powers
To ensure statutory requirements are met, we obtain data under our formal information gathering powers. These are contained in section 353-10 of Schedule 1 to the Taxation Administration Act 1953.
This is a coercive power, and data providers are obligated to provide the information requested.
We will use the data for tax and super compliance purposes.
Privacy Act
Data will only be used within the limits prescribed by Australian Privacy Principle 6 (APP6) contained in Schedule 1 of the Privacy Act and in particular:
- APP6.2(b) – the use of the information is required or authorised by an Australian law
- APP6.2(e) – the ATO reasonably believes that the use of the information is reasonably necessary for our enforcement-related activities.
Data elements we collect
We collect information from novated lease providers on novated leases held by individuals. We negotiate with the selected data providers individually to obtain data held within their systems. The collected data may contain all or a selection of the fields listed below.
Lessee/Employee details
Identification details include:
- unique identifier of the lessee
- name of the lessee
- addresses of the lessee (residential and postal)
- date of birth of the lessee
- all contact telephone numbers (for example: fixed line, mobile) for the lessee
- email addresses of the lessee
Employer details
Identification details include:
- unique identifier of the employer
- name (trading name and legal name) of the employer
- ABN of the employer
- addresses (business and postal) of the employer
- contact name for the employer
- contact telephone numbers (for example: fixed line, mobile) for the employer
- email addresses of the employer
Lease transaction details
Transaction details include:
- unique identifier for the lease transaction
- lease start date
- lease end date
- lease expected end date
- lease termination date
- number plate of the vehicle
- type of vehicle (new or used)
- category of vehicle (sedan, wagon, utility etc)
- lease price per month including GST
- items packaged with the vehicle lease
- expenses packaged with the vehicle lease (for example: fuel, servicing)
- bank account name for the lessee
- bank account number for the lessee
- bank account BSB for the lessee
Number of records
We expect to collect data on approximately 240,000 individuals each financial year for this program.
Data quality
We anticipate that the data quality will be of a high standard. Entities providing novated leasing finance services have sophisticated computer systems.
Novated leasing finance service providers operate in cross jurisdictional legislative frameworks. They must satisfy specific regulatory requirements including taxation, registration, and insurance obligations. They also have due diligence obligations to maintain the quality of their records to manage and supervise salary packaging accounts as a third-party financier offering novated leases.
Data retention
We collect data under this program for all financial years from 2018–19 to 2025–26. We collect this data annually following the end of each March.
Due to the number of data providers, we collect data periodically. We work with the data providers and aim to balance our requests against peaks and troughs of demand in a data provider's own business.
We destroy data that is no longer required in accordance with the Archives Act 1983, and the records authorities issued by the National Archives of Australia, for both general and ATO-specific data.
We retain each financial year’s data for 5 years from receipt of the final instalment of verified data files from the data providers.
The data is required for this period for the protection of public revenue:
- The discrepancy matching that occurs under parts of this program is iterative in nature. This includes the data being used to generate lodgment reviews with subsequent lodgments then being compared to the transactional data for accuracy. This process can typically occur over multiple financial years.
- Retaining data for 5 years enables us to conduct long-term trend analysis and risk profiling of the employees and employers utilising novated lease arrangements. This data improves a holistic view of novated lease practices.
- The data enhances our ability to identify taxpayers who may not be complying with their tax and super obligations, which is integral to protecting the integrity of the tax and super systems.
- Retaining data for 5 years supports our general compliance approach of reviewing an assessment within the standard period of review and aligns with the requirements for taxpayers to keep their records.
- The data is also used in multiple risk models, including models that establish retrospective profiles over multiple years aligned with period of review.
While increased data retention periods may increase the risk to privacy, we have a range of safeguards to manage and minimise this. Our systems and controls are designed to ensure the privacy and security of the data we manage.