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ATO Data Collection on Taxpayers

Article By Adam Hurwood | | Accounting & Tax

ATO’s 2024 Vision

The ATO’s vision for 2024 is “we use data and insights to deliver value for our client and inform decision making across everything we do”. Strategic initiatives under this includes data acquisition; client profiling and analytics to deliver client-risk scoring; and make use of data and tools to extend automation.

What Does This Mean?

In everyday language, the ATO is in the process of expanding its wings to collect more data and utilising it to provide insight into each taxpayer, even before the tax return is lodged. The keywords coined under this vision is ‘early engagement’.

The core purpose for the ATO is to identify under-reporting of income. This is done by pulling together data sets and connecting the dots to create a big picture of each taxpayer’s existence. Soon as more dots are collected, any that is out of place will stand out like a sore thumb. These datasets are not just pulled from the bank or your employer. Information is collected from many government agencies and private sources.

One simple example (that will most likely affect us all) is the real property transfer information received from the State Titles Offices. If you’ve sold a property, the ATO will be expecting a capital gain event reported in your tax return. Included in the information they receive is the property address, date of sale and how much you’ve sold it for. They also have information on the average property value appreciation or depreciation of your specific area. So, any anomaly of a gain or loss on the property sale will catch their attention.

What Data Does the ATO Collect?

  • Property purchase and sale information from State Titles Offices
  • Rental Bonds: ATO recently announced that they are in the process of acquiring rental bonds data dating back to September 1985. Which means the ATO will be able to identify any unreported rent on property held under your name.
  • Online selling: details (including, sellers ABN, company name, address, transaction details etc) of any online seller who sells goods and services to the value of $12,000 or more, is received by the ATO.
  • Ride-sourcing: identification and vehicle registration details of all ride-sourcing drivers (i.e. uber drivers) and details of the payments the drivers receive.
  • Lifestyle assets: information on insurance policies for certain classes of assets including marine vessels, enthusiast motor vehicles, thoroughbred racehorses, fine art and aircraft. They’ll know what you own and run checks to see if this accumulation of wealth make sense compared to the income you’re reported.
  • Credit and debit card data: data on debit and credit card payments received by business through their merchant accounts. Information transmitted to the ATO includes, all the details of the merchant holder (i.e. the business owner) and monthly totals of the ins and outs including refunds and counts of transactions, monthly sales amounts where cards were not present and cash out components on merchant transaction. Essentially, monthly summaries of all transactions that go through a merchant facility of a business.

These are just a few examples and the ATO is only getting started.

What Should You Do?

Report income you earn from all your sources. The ATO will sooner or later figure out something’s not quite right if you’re driving a Lamborghini and only reporting income of $50,000. This might sound extreme but the ATO is increasingly leveraging technology internally and with third parties to identify discrepancies in your income and your spending.