How does the ATO use it’s data-matching system?
The ATO uses its data matching services to ensure individuals and businesses are correctly reporting all of their income. The ATO collects data from a wide range of sources including banks, financial institutions and government agencies.
The system has been put into place by the ATO to ensure a simplified process for taxpayers and to assist in providing complete and accurate tax returns. Most taxpayers are willing to meet their tax reporting obligations but often there will be a minority who don’t. The data matching system can help identify any discrepancies between the data that the taxpayer reports to the ATO, and the data that the ATO receives from its variety of sources.
The types of data that the ATO typically will data match include:
- Employment income
- Interest Income
- Government Payments
- Disposal of Shares and Property for CGT Purposes
- Distributions from Partnerships, Trusts & Managed Funds
- Private Health Insurance Policy Details
- Payments Made to Contractors
If the ATO finds a discrepancy, it will contact the taxpayer with details regarding the issue and provide the taxpayer with the opportunity to check their records and correct any potential mistakes. If a taxpayer has made an error for any reason, the ATO will work with the taxpayer in order to better understand the law and their reporting obligations.
Data matching has proven to be a valuable tool in ensuring taxpayers are correctly preparing their tax returns, and is expected to perform a major role in the ATO’s strategy to ensure accurate compliance from taxpayers into the future.
Contributed by Jordan Williams