Australia

ATO Data Matching

The Australian Tax Office is expanding its wings by beginning the process of collecting more data and using it to provide a snapshot of the circumstances of each individual taxpayer. This process can be applied before the tax return is even lodged.

What Does this Mean?

The core purpose for the ATO is to identify under-reporting of income – this is done by pulling together data sets and connecting the dots to create a big picture of each taxpayer’s position. The premise of the ATO’S new data mining process is that, as more dots are collected, any data that is out of place will stand out like a sore thumb.

These datasets are not just pulled from the bank or your employer but are now also collected from many government agencies and even private sources.

One simple example (that will most likely affect us all) is the real property transfer information received from the State Titles Office.

If you have sold a property, the ATO will expect a capital gain event to be reported in your tax return. Included in the information they receive is the property address, date of sale and for how much you have sold it. They also have information on the average property value appreciation or depreciation in your geographical area. Therefore, any anomaly of a gain or loss on the property sale will catch the ATO’S attention.

What Data Does the ATO Collect?

  • Property purchase and sale information from State Titles Office.
  • Online selling information including the seller’s ABN, company name, address, transaction details, etc.
  • Ride-sourcing: identification and vehicle registration details of all ride-sourcing drivers (i.e. Uber drivers) and details of the payments the drivers receive.
  • Lifestyle assets such as:
    • information on insurance policies for certain classes of assets.
    • Information on a motor vehicle – they will know what you own and run checks to see if this accumulation of wealth makes sense compared to the income you are reported.
  • Credit and debit card data on personal and work-related expenses.

These are just a few examples – and the ATO is only just getting started.

What Should You Do?

You need to ensure that you include all of the income that you earn from all sources in your reporting- salary and wage, business, investments such as rental properties and shares. Failure to do this will undoubtedly have tricky consequences – the ATO will sooner or later figure out something is not quite right if you are driving a Lamborghini and only reporting income of $50,000.

The average taxpayer should keep in mind that the ATO is increasingly leveraging technology internally and with third parties to identify discrepancies in your income and your spending.

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