Beware of the ATO’s data-matching machine

The Australian Tax Office must have one monster computer system to store all the data it continues to accumulate! The use of data-matching (and data-mining) is now a well worn and central plank of the ATO’s compliance activities.

Taxpayers may be surprised to know the kinds of data the ATO matches and how widespread that is. Data-matching programs have in the past covered, for example, property sales, share sales, investment income, car registration records, the building industry, coffee suppliers, contractor payments, credit/debit sales, offshore bank accounts, and social security payments.

The list seems almost endless.

So what’s left? Plenty it seems, judging by the latest announced programs.

Most recently, the ATO announced that it would conduct a data-matching program targeting online sellers. It will collect information of sellers who have made sales of $20,000 or greater in the 2010-11 income year (July 1, 2010 to June 30, 2011) through various online selling websites. The kinds of information to be collected will include:

• user identification name and number;
• name;
• address;
• telephone number;
• date of birth;
• email address;
• registration date;
• number and value of monthly sales;
• Australian Internet Protocol address; and
• Bank account details.

The ATO said the selected online selling sites represent some of the largest market participants in Australia and have been selected as they track the sale/purchase price of goods and services as part of the transactions through their websites.

Records relating to approximately 11,000 individuals will be matched to identify non-compliance with lodgment, payment and correct reporting obligations under taxation law, including undeclared income and GST obligations.

eBay sellers watch out

While still talking about online, although part of a different data-matching exercise, the government recently indicated that a pilot program which matched Centrelink records against eBay users would become a permanent part of its compliance system from May this year. The government said the program identified that some people were claiming social security payments while running what it considered to be a successful online business. It said the program identified more than $800,000 in debts.

The Minister for Human Services said the program “isn’t aimed at people selling a few second-hand clothes or other items” but rather “identifies people who earn large amounts from eBay, while also claiming support from the government”. The pilot program had identified about 100 cases that warranted further investigation by the Department. About 25 debts have already been raised, with the average debt amount about $32,000 – roughly double the average debt for other types of investigations over the past two financial years, he said. Some cases have also been referred to the Commonwealth Director of Public Prosecutions.

Employers are in ATO sights too…

Another new ATO data-matching program will target employers. The ATO will request and collect the names and addresses of employer entities from state and territory WorkCover and WorkSafe sources for the 2011 to 2013 financial years.

According to the ATO, the total number of records involved Australia-wide is estimated to be 942,000, of which approximately 103,000 will be individual employers. The data will be matched to identify employers that may not be complying with their registration, lodgment and payment obligations under taxation law. The ATO said it may also disclose information about employers that may not be meeting their obligations under workers’ compensation laws if requested by relevant WorkCover authorities.

Seems as though in data-matching cyberspace, “everyone hears you scream” … and then passes on that information to the relevant authority!

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.