You may have heard that ATO data matching technology is now being used in Australia. The ATO launched the system to shine a light on people who have undeclared income missing from their tax returns, opening a new opportunity to catch people out and collect more tax from Australians who may understate their income.
What is ATO Data Matching?
The ATO data matching might best be described as a two-step process.
1. The ATO collects information about taxpayers. About you! The ATO collects your data from…
- your employers,
- your bank and other financial institutions (now including banks overseas),
- health insurance funds,
- BAS Statements,
- Superannuation accounts,
- and the property information your state may have.
2. The ATO compares all of this data against the information provided in your tax return. If you have undeclared income, the ATO will find out easily.
Why do other organisations share my private information with the ATO?
Australian banks and other institutions that provide your information to the ATO are legally required to do that – and now the ATO is extending this reach overseas as well. Nobody should imagine that their finances are a secret that the ATO can’t find out.
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 and the ATO applies back-payment of taxes plus fines and even back-payment of interest charges in some cases.
When it comes to secondary jobs, such as renting a room through Airbnb or driving your car as an Uber driver, you need to ensure you declare your income – all of it – to avoid penalties and fines. The ATO data matching technology is being used specifically for catching out these two industries.
Likewise, tradies and sole traders who receive any undeclared income “off the books” are now at serious risk of being caught out. The ATO can, and will, check your bank accounts, cross reference payments against an ABN and confirm missing income from your tax return.
If you’re in the wrong, you can fix it.
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 reflect your actual income (although, it’s better to just do it the right way to begin with.) ATO data matching technology is here to stay, which will become another reason that Australians choose to get a tax agent’s help lodging their returns correctly.
Need more information? Our accountants can talk to you about data matching and how it may affect you.