Industry evidence suggests that recently there has been a noticeable increase in ATO review activity driven by its data-matching capabilities.
Many businesses and individuals around Australia have received letters asking the tax payer to explain anomalies in their tax returns or activity statements. For years data has been mined and stored on the ATO’s state of the art $800 million computer system and as technology advances, the ATO are finding more ways to use and match the transactions to detect fraud and uncover abnormalities in returns. The ATO says that matching external data with their own help to ensure that people and businesses comply with income tax, superannuation, goods and services tax and fringe benefits tax obligations and help to detect fraud against the Commonwealth.
As computer technology is rapidly advancing, so too is the ATO’s ability to match information. The onus falls firmly on the taxpayer to make sure information contained in their tax returns are complete and correct. Due to data matching efforts to date, the ATO conducted over 445,000 reviews and audits which have raised over $947m in additional tax.
The government has recognised the effectiveness of the ATO’s data matching activities and has provided an additional $78m in funding to expand and improve their systems and capabilities. The ATO currently check over 640 million transactions each year to ensure income is reported correctly and claims are not overstated.
The sources of information the ATO has access to include:
- Banks and financial institutions which provide income information such as interest and debit and credit card sales and purchases
- Investment bodies, which provide investment income information such as dividends and managed fund information
- Foreign countries with whom Australia has a tax treaty
- Australian Securities and Investments Commission (ASIC)
- AUSTRAC, which traces information on banking transactions greater than $10,000
- Centrelink, which provides information on welfare payments
- Child Support Agencies
- Department of Immigration and Citizenship
- Employers, who provide employment information including PAYG payment summaries
- Medicare which provides data to administer the health insurance incentives rebate
- Motor registries which disclose information on motor vehicles purchased over $10,000
- Share registries to obtain dividend details and purchase/sale information
- State and territory title registration bodies for sales and other transfers of real property
- Online selling websites such as eBay to trace substantial sales
- Businesses in the building and construction industry for payments to contractors
This means that the ATO has access to data about money you earn, property purchases and sales, car and boat purchases, your business connections and even members who sit on the board of your company. Industry wide data is also analysed and benchmarked to identify trends which allow the ATO to focus on future compliance risks.
As always, it is important to make sure your tax return is complete and accurate. If you would like any further information about data matching and what it means for you and your business call your Azure Group tax advisor on (02) 9238-1188 or email ourteam@azuregroup.com.au
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