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Snap! The ATO is watching you in more ways than you know!

It’s the ATO’s job to ensure all taxpayers contribute fairly [and legally] to enable the running of our country.

You won’t be surprised to know that the ATO use a range of strategies to ensure everyone is paying the correct tax. When the ATO discover people who are not complying with their obligations, or detect fraud, they’re not afraid to prosecute and recover tax losses and their costs.

Have you heard of their new automated checking system? Known as “Data Checks,” the ATO automatically draws data from a very wide range of sources – it appears no stone is left unturned. Shortfalls or inconsistencies that indicate tax fraud or avoidance are investigated further.

As this new process is automatic, the ATO estimates it will match over 600 million transactions in the next financial year.

Data matching allows information from a variety of sources to be brought together and compiled at lower costs than manual methods.   This automatic process enables significantly more checks than previously possible

The ATO have announced the following areas are on high priority:

These records will identify sales made by taxpayers which are matched against taxpayer’s records to determine if there is evidence of unreported income. A number of leading banks including the “Big Four” plus other institutions including American Express,  and BWA Merchant Services are assisting the ATO in their ongoing checks. This means, a wide range of your transactions are being automatically checked!

The ATO is data sharing with a range of departments including the Department of Veteran’s affairs, Centrelink in order to check that tax offsets and government benefits are being incorrectly claimed.

The ATO is focusing on contractors providing services to local governments. The ATO also receives information from state and territory Government departments about property transactions.

This involved identifying all vehicles sold transferred or newly registered. The key focus in this category is for non-compliance with income tax / superannuation, GST, FBT and luxury car tax.

This is just a summary of data checking that we‘ve identified from the ATO. On top of these areas, the ATO also have an agreement with Medicare Australia which gives them online access to information held by the Australian Securities & Investment Commission (ASIC) and banking transactions captured by AUSTRAC.

The ATO then checks the data with information provided on tax returns or in business activity statements. This information is used to detect people who are not in the tax system or are behind in meeting other obligations including paying debts and meeting superannuation obligations.

This data is also used to check trends within industries which help the ATO to focus on future compliance risks. It’s one form of checking that won’t be finishing anytime soon!