Data Matching – are they catching you?

A question I often get asked is “will they audit me?” or I hear “I don’t want to get audited”. The process for getting audited by the Australian Taxation Office or ATO is often a slow and well planned action, not something that happens overnight and without you knowing. This is mostly because they have a strong data matching program that picks errors and omissions long before any audit will happen.  The ATO receives information from multiple third party organisations in relation to taxpayers financial affairs. This helps them verify you have reported everything in your Tax Return. Previously they have been focused on omitted income, they receive information form majority of banks and financial institutions about interest you have earned. This saw a flurry of returns amended in 2013, and 2014.  They are now extending their focus to;

  • capital gains events, like sale of property or shares
  • employment related foreign income
  • contractors income, and
  • rental property deductions

Last year they cross referenced 600 million transactions provided by third parties to identify omitted income and gains, or incorrectly claimed offsets. Nearly 400,000 taxpayers were contacted to correct omitted income for incorrect information, with 90% of this activity resulting in amendments.  Increasingly important for Small Business owners they are focusing on Online selling, special payment systems that do auto direct debits ie like gyms, and also Motor Vehicle Registry information. Selling and buying cars are their focus, however will also be looking at fringe tax benefits, and fuel schemes.  Another area the ATO are data matching this year is Private Health Insurance Policy details. I have clients’ returns on hold right now due to this data matching program. That’s why it is important to take your private health insurance statement to your Tax Agent when preparing your Tax return. If you have any questions speak to your accountant or make an appointment now.