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ATO data matching

May 05, 2011

Over the last five years, data matching has been a powerful tax compliance tool for the ATO. It has acted as a huge deterrent for taxpayers thinking about not disclosing all of their income.

The ATO's data-matching program collected an extra $260 million of tax revenue in 2009.

When you lodge your income tax return, the onus is firmly on you to make sure that the information contained within the return is complete and correct. As computer technology has improved in recent years, so too has the ATO's ability to datamatch tax information.

Don't try to understate any of your income. If you are on the tax lodgement program of a registered tax agent then they will generally get a pre-filling report from the ATO to help identify income you may otherwise have missed. It takes time for this information to fi lter through from the relevant institutions, so the report needs to be seen as a starting point for doing your tax return, not a comprehensive solution.

The ATO has a responsibility to the community to ensure that everyone pays their fair share of tax under the law. If all taxes are correctly collected it means better roads, hospitals, education and perhaps even lower taxes as well. The ATO checks taxpayer compliance with the law by verifying the amounts included in
tax returns with information from third parties.

The ATO gets its hands on data from a number of institutions, including:

  • AUSTRAC, which provides information on banking transactions over $10 000
  • Australian Securities and Investments Commission (ASIC)
  • banks, financial institutions and investment bodies, which provide investment income information such as interest, dividends and managed funds
  • Centrelink, which provides information on welfare payments
  • Child Support Agency
  • Department of Immigration and Citizenship
  • employers, who provide employment information including PAYG payment summaries
  • industry bodies, which provide information for specific transactions such as for the plasterboard and horse industries
  • Medicare Australia, which provides data that enables it to administer the 30 per cent health insurance incentives rebate
  • motor registries, which provide information on individuals and entities that have purchased motor
    vehicles valued over $10 000
  • share registries, which provide information on share transactions for CGT purposes
  • state and territory revenue offices, which provide information on house purchases and disposals
  • 42 foreign governments, which provide information relating to tax treaty arrangements.

The ATO then matches this data with information lodged in tax returns to detect those who may not be showing all of their income correctly in their tax returns. If there are any discrepancies the ATO will take further action which may include audits, penalties and, in some cases, imprisonment.

Industry wide data is also analysed (and benchmarking exercises are conducted) to identify trends and to allow the ATO to focus on future compliance risks.

As pressure on tax collection has increased in recent years, so too has ATO audit activity. In the past few years, the tax man has requested personal information from eBay and the Trading Post Australia on those users who have sold goods or services greater than $20 000 in any of the last three financial years.

The ATO also identifies people who have never paid taxes or who are behind in lodging tax returns and activity statements, paying taxes or meeting their employer superannuation obligations.

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