Property investors face greater ATO scrutiny following $78 million data-matching budget handout

Property investors who use questionable tax avoidance schemes will come under more sophisticated levels of scrutiny following the Australian Tax Office (ATO) receiving an additional $77.8 million in federal budget funding over the next four years.

The extra funds are aimed at improving compliance among taxpayers by “expanding data matching with third party information”.

The ATO will use the funds to undertake compliance activity to target “known tax scheme designers, promoters, individuals and businesses who participate in such arrangements”.

“This measure will tackle the use of abusive trust schemes in the wider community and encourage active compliance by taxpayers,” says Treasury in its federal budget papers.

The money will be used to strengthen existing reporting systems for:

• taxable government grants and specified other government payments;
• sales of real property, shares (including options and warrants), and units in managed funds;
• sales through merchant debit and credit services;
• managed investment trust and partnership distributions, company dividend and interest payments; and Centre transactions reported to the ATO by the Australian transaction reports and analysis

The ATO began using improved data-matching technology earlier this year to closely scrutinise residential and commercial property sales to ensure tax payers paid the correct amount of tax.

Treasury estimates this technology has resulted in an estimated increase in tax receipts of $431.7 million with a projected gain to revenue of $610.2 million over the coming financial year.