You may have heard that ATO data matching technology is now being used in Australia. The ATO launched the system to find missing income from individual tax returns. It’s a new, more sophisticated way to collect more tax from taxpayers who may, either accidentally or deliberately, understate their income.
What is ATO Data Matching?
ATO data matching is best be described as a two-step process.
1. The ATO collects information about you from:
- your employers,
- your bank and other financial institutions (now including banks overseas),
- health insurance funds,
- BAS Statements,
- superannuation accounts,
- ride share companies (Uber, Didi, Ola, etc.),
- holiday let businesses (Airbnb, etc.), and
- other property information your state has.
2. The ATO then compares all this data against the information you provide in your tax return and looks for any differences. So, if you have undeclared income, the ATO will find it easily and they’ll contact you for an explanation.
Why do other organisations share my private information with the ATO?
They don’t have a choice! Australian banks and other institutions that provide your information to the ATO are legally required to. The ATO has even extended its reach to overseas institutions as well. Our finances are definitely not private anymore!
Do you have undeclared income? You risk getting caught by ATO data matching.
The purpose of the ATO data matching is to identify taxpayers who aren’t doing the right thing. If anyone deliberately tries to hide undeclared income, the ATO’s data matching aims to find them. Once identified, the ATO applies back-payment of taxes plus in some cases also applies fines and interest charges.
When it comes to additional income streams, such as renting a room through Airbnb or driving your car as an Uber driver, you need to ensure you declare ALL of that income on your tax return. The ATO data matching technology is regularly used to identify those working or providing services through these platforms.
Likewise, tradies and sole traders who receive any undeclared income “off the books” are also in the spotlight. The ATO can now check your bank accounts to cross reference payments against an ABN, and confirm missing income from your tax return.
If you’re in the wrong, you can fix it.
Although, it’s better to just do it the right way to begin with, the ATO offers “voluntary disclosures” if you’ve done the wrong thing and you want to own up to it. Your tax accountant can offer advice on amending your tax return to include additional income. ATO data matching technology is here to stay, which is another reason to choose Etax to lodge your return correctly.
Need more information? Our accountants can talk to you about data matching and how it may affect you.