ATO data-matching targets property deals

ATO data-matching targets property deals
ATO data-matching targets property deals

Tax in 2013 is certain to be as lively as ever, probably more so with a federal election looming. The tax promises are sure to flow thick and fast.

I'd like to start this year with an old favourite – ATO data-matching. This technique is now regularly used by the ATO to gather a wide range of information it can then trawl through to detect compliance with the tax laws. No one should underestimate the sheer volume of data the ATO now collects and with the ever-increasing sophistication of techniques to analyse and "slice-and-dice" that data, the tax affairs of Australians will come under closer scrutiny.

In its latest endeavours, the ATO has announced data-matching programs targeting offshore bank accounts, credit and debit card sales, and real property transactions. The information collected will be electronically matched with certain sections of ATO data holdings to identify non-compliance with lodgment and payment obligations under taxation laws.

The ATO intends to collect data relating to credit and debit card sales of entities for the period July 1, 2011 to June 30, 2012 from various banks and credit card companies, including the Commonwealth Bank, St George, Westpac, ANZ, NAB, American Express and Diners Club.

Small and medium businesses likely to be data-matched

The program is designed to enable the ATO to better understand and address the compliance behaviour of taxpayers through electronic bulk data-matching to identify potential ATO administrative action. This might include checks on whether tax returns or BASs have been lodged, whether all sales have correctly been returned by the merchant and/or whether GST has been correctly collected and recorded. It is expected that records relating to approximately 900,000 merchants will be matched. Many SMEs may find themselves included in this matching.

Buying and selling property won't escape the taxman's gaze either. The ATO plans to collect the names and addresses of individuals and entities transacting with real property from various sources, including state revenue offices, residential tenancy authorities, and other government agencies. The ATO aims to address non-compliance with lodgment and debt payment through electronic bulk data-matching to identify potential ATO activity.

 


 

It's not too difficult to imagine what might catch the ATO's eye. Outstanding tax return and activity statement lodgments would be high on the list. Capital gains tax issues also spring to mind, as does return of rental income, correctly claiming property deductions, ownership of property issues, and more.

Last year, the ATO flagged an increasing focus on property developers who have a history of non-compliance with GST. The ATO said some developers claim input tax credits throughout the life of the development, but then avoid paying GST when they sell.

A large-scale data-matching program

With records relating to approximately 10.4 million individuals to be matched, the data-matching project is a large-scale exercise, and the data will come from all states and territories. The property market might have its ups and downs, but is does keep moving – and the taxman won't be far behind!

Australians with offshore bank accounts will also come under the ATO spotlight. Approximately 50,000 offshore account records will be matched.

The ATO says it will collect account details of bank customers to identify Australian resident taxpayers with offshore bank accounts which may evidence undeclared income and/or gains in the 2008-09 to 2010-11 financial years, that is, effectively from 1 July 2008 to 30 June 2011. The ATO will request the account details from a wide range of banks such as: ANZ, Commonwealth Bank, Westpac, Bank of Qld, Macquarie Bank, Bank of China (Australia) Limited, Citigroup, HSBC, Investec Bank, Rabobank Australia Limited, Citibank, Union Bank of Switzerland.

The data-matching is intended to help the ATO identify any non-compliance with lodgment and payment obligations under the tax laws. Of course, offshore bank accounts may have been established quite legally and for legitimate business or other reasons. The ATO's data-matching may, however, result in a query that taxpayers will have to answer.

The detection of offshore bank accounts is now a key activity of revenue authorities around the world. It is not limited to Australian residents and has also been a major focus of the U.S. Internal Revenue Service as well concerning U.S. residents.

Data-matching is well and truly here to stay. Doubtless the ATO will conduct more of these programs throughout the coming year. Stay tuned for more details.

Terry Hayes is the editor-in-chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.

This article originally appeared on SmartCompany.

Terry Hayes

Terry Hayes

Terry Hayes is the editor-in-chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.

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