Electronic data-matching is a tool that the ATO are now using to ascertain whether people are declaring all of their income in their tax returns. Currently the ATO are currently running several data matching programs such as:
Banking transparency strategy (data matching with offshore bank accounts held by residents of Australia)
Credit & debit cards - 2014-15 financial year
Credit & debit cards - 2012-13 and 2013-14 financial years
Foreign Investment Review Board
Department of Human Services Specified Benefits and Entitles 2014-15 to 2016-17
Department of Immigration & Border Protection Visa Holders
Lifestyle Assets 2013-14 and 2014-15
Motor vehicle registries
Music industry royalty payments
Online selling - 2013-14 financial year
Online selling - 2014-15 financial year
Real property transactions - 1985 - 2017
Specialised payment systems
Taxable government grants & payments
What the hell is data matching?
Data matching involves bringing together data from different sources and comparing it, this is done by computers using advanced software so it’s not a question of a civil servant sitting behind a desk somewhere wading through thousands of tax returns and bank statements
The data is then electronically matched with the ATO’s own data holdings to help it identify, for example, individuals who may not be reporting all their income.
In an increasing technological age where practically all money is held electronically somewhere and can therefore theoretically be matched with information held elsewhere.
So how would it affect me if I own a house in Ireland and don’t declare it?
If we take the Banking Transparency Strategy for example, its stated purpose is:
“to identify taxpayers who are not complying with their taxation obligations by comparing data reported by taxpayers with data on offshore accounts provided by financial institutions”
So in essence what happens is the ATO share information with financial institutions and they provide information to the ATO, if the ATO’s software spots any anomalies its issues a letter automatically to the tax payer requesting further details. This happens without any actual humans being involved at all!
If a satisfactory response is not received, this is when the humans in the shape of tax officials become involved they will start to ask further questions, so imagine a scenario where they find out you have a mortgage in Ireland that has rental payments going in every month. It would be pretty hard to explain why you didn’t include the income in your Australian tax return.
What kind of information do these banks have to give the ATO?