ATO ramps up data matching to weed out non-compliance
With the emergence of digital business and the sharing economy, both state and federal authorities are stepping up data matching activities as a means of sampling the general population to detect evasion, non-compliance with legal and tax obligations, and to identify potential audit targets.
What is data matching?
Data matching involves agencies, such as the Australian Taxation Office and State Revenue Offices, compelling organisations to share digital information about the transactions they facilitate and the customers they are facilitated for. This information is then matched against the declarations and lodgement activities of those customers to determine whether they are fulfilling their compliance obligations.
What data is mined?
The types of data mined and the level of detail extracted are regularly expanding. The Australian Taxation Office, for example, currently has 23 data matching protocols covering several organisations and data sets, including:
What needs to be emphasised here, is that organisations and agencies are communicating with one another on an ever more regular basis and sharing more detailed and comprehensive information. In short, non-compliant taxpayers are at greater risk of being identified.
As business and transactions are effected increasingly across the internet, and data mining technology becomes more sophisticated, it follows that data matching will be relied on more to detect non-compliance. Data matching will continue to be used to identify key taxpayer subsets or industries to target for review or audit activities.
Since non-compliance can now be detected with relative ease, the importance of keeping up to speed with compliance obligations and changes in law is paramount. Trusted advisors are an essential component in any risk management strategy, helping to bridge any knowledge or resource gaps that may result in non-compliance.
Should you require further information to the above or have any non-compliance concerns we may assist with, please do not hesitate to contact your engagement partner on 02 9283 166.