The ATO – a step ahead?

Taxpayers may fail to meet their obligations (deliberately or unintentionally) in the areas of registrations, reporting, lodgements, and payment of taxation. The Australian Taxation Office’s (ATO) data matching capabilities have increased significantly over the years. As a result, so has the chance that they will catch people not meeting their obligations.

The most common issue is the understatement of income in tax returns. Income may be understated by excluding the business sales, investment income, disposal of investments or foreign income. 

Most people are aware the ATO collects data from employers, banks, share and trust registries and health insurance funds. Following are some additional third-party sources, the information they provide to the ATO, and what the ATO is doing with that information.

  • State motor vehicle registering bodies
    The ATO receives information about motor vehicles sold, newly registered, or transferred. The ATO particularly look for GST compliance, Fringe Benefits tax compliance and motor vehicles purchased that are not commensurate with income reported.
  • State Title offices
    Property details, transfer price and buyer and seller information on the sales and transfer of real property are provided to the ATO via appropriate channels. The ATO uses this information to ensure compliance with capital gains tax (CGT) and GST compliance.
  • Online Selling platforms (e.g. eBay, Gumtree)
    The ATO reviews the quantity and value of on-line sales to ensure taxpayers are meeting their obligations in the area of GST and ABN registrations, reporting and lodgements, and/or payment of tax liabilities.
  • Sharing Economy Facilitators (e.g. Uber, Ola, Airbnb)
    Information on payments to participants is provided to the ATO to ensure that income is correctly included in income tax returns and that participants are registered for an ABN and GST (where required).
  • Merchant Facilitators (e.g. banks) and Specialised Payment Systems (e.g. PayPal)
    The ATO is provided with electronic payments processed for business, including total debit and credit card payments received by the entity. This information is used to ensure businesses comply with their tax obligations such as lodging their tax returns, reporting their income, and paying their GST and income tax.
  • Australian Crypto Currency Designated Service Providers
    Purchase and sale information is provided to the ATO. The ATO uses this data to confirm that taxpayers are accounting for their crypto currency transactions in their income tax returns.
  • AUSTRAC and International Treaty partners
    The ATO receives information about foreign source income and ensures this has been declared in the taxpayers’ income tax return.

The ATO are putting significant resources into data matching to ensure that everyone is paying their fair share of taxation. Penalties imposed by the ATO can be as high as 75% of the additional tax liability. More than ever it pays to be upfront and honest.  

Please contact your local Accru advisor if you have any questions about how this may apply to you.

About the Author
Martin Rush , Accru Perth
Martin’s hands-on approach to understanding his clients’ needs enables him to find the best possible solutions for them. His approach builds trust and has enabled him to forge many long-term relationships over his 20-year career. Martin Rush joined Accru Page Kirk & Jennings in 1993 after completing his Bachelor of Business degree. He was promoted to partner after 12 years with the firm. His professional experience includes three years working in London with the National Audit Office and Audit Commission.
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