The Australian Taxation Office (ATO) has demanded insurers hand over information about high net worth clients, insuranceNEWS.com.au can reveal.
Notices served under Section 264 of the Income Tax Assessment Act request details of art collections insured for more than $500,000.
“In the course of managing tax compliance of wealthy individuals, the ATO often obtains information from a variety of sources,” a spokesman told insuranceNEWS.com.au.
“We can confirm we have sought information from insurance companies. We use this information to assist our understanding of whether declared income is sufficient to support accumulated wealth.”
Samantha O’Brien of law firm DLA Piper says insurers have no choice but to comply.
“No privacy or confidentiality considerations would over-rule the notice from the ATO,” she told insuranceNEWS.com.au.
However, opinion appears to be divided on whether insurers should then inform brokers and/or clients.
An AIG spokesman says the insurer has not provided information to the ATO yet, but “we would absolutely inform brokers/clients if we were requested”.
But other insurers believe such a move could be illegal.
A Calliden spokesman says its high net worth homes underwriting agency Mansions has been approached, and the company is complying with the ATO directive. He told insuranceNEWS.com.au Mansions intends to inform brokers and clients through a statement on its website.
insuranceNEWS.com.au understands Chubb has also been approached and has informed brokers whose clients are involved, although the insurer has made no official comment.
Vero and Summit say they have not been contacted, while Allianz has declined to comment.
High net worth clients may find the thought of insurers sharing details of their assets with the ATO unpalatable.
But one industry source says “it would not be helpful” for brokers or their clients to remonstrate with insurers who provide details, given they are compelled to comply with any request for information.