The introduction of new software has had a dramatic impact on how individuals manage their finances and business requirements. Adopting new technology has not only helped to reduce admin hours and potential reporting errors, but additionally has assisted individuals and businesses to stay compliant by improving the way information is prepared for various taxation obligations.
Recognising how technology has streamlined certain lodgement processes, the ATO are embracing the technology change and are now expanding a number of their data matching processes. This change will help support individuals and businesses to report the correct information to the ATO.
With these updates rolling out soon, it is important that you understand what changes are happening so you don’t encounter any surprises this coming financial year.
What is the ATO’s Data Matching Program?
Data matching is a tool that allows the ATO to electronically gather, validate, and analyse information from a third-party source. This information is then used for a number of education and compliance activities.
To learn more about Data Matching and how the information is used by the ATO, please visit the ATO’s website.
Where will the ATO source their information from?
Information is provided to the ATO from a wide range of third-party sources, both public and private. Some examples of third-party sources and the information they provide include:
| Third Party Source | Information Provided |
| Banks, financial institutions and investment bodies | Investment income |
| Employers | Payments to employees and contractors |
| State and Territory motor vehicle registering bodies | Motor vehicles sold, transferred or newly registered |
| State and Territory title offices and revenue agencies | Sales and other transfers of real property |
| Government bodies | Pensions, benefits, rebates, taxable grants and other payments |
| Australian Transaction Reports and Analysis Centre (AUSTRAC) and international treaty partners | Foreign source income |
| Online selling platforms | Quantity and value of online sales |
| Sharing economy facilitators | Payments to participants |
| Financial institutions providing merchant facilities and administrators of specialized payment systems | Electronic payments processed for business including total credit and debit card payments received |
| Stock exchanges and share registries | Share transactions |
| Businesses in the building and construction industry | Payments made for building and construction services |
| Cryptocurrency designated service providers | Purchase and sale information. |
What are the benefits of the ATO’s Data Matching Program?
These data matching programs are designed to increase community confidence in the integrity of the tax system.
The prefilling service provides data for taxpayers to review and include in their tax returns, helping people get it right the first time reduces the need for follow-up activity.
If the ATO checks your information, it doesn’t automatically mean they think you have been dishonest in your tax affairs. If the data doesn’t match, they may contact you to find out why.
How will the ATO use the data collated from the Data Matching Program?
The ATO uses the data to:
- Help individuals and businesses understand their tax obligations, including registration, lodgement, reporting and payment;
- Protect honest businesses from unfair competition;
- Make it easier for individual taxpayers by pre-filling their returns; and
- Assess the levels of voluntary compliance of individuals and businesses with their tax obligations.
What Is Being Introduced to the Data Matching Program in July 2023?
The ATO have identified that an estimated 90% of rental claims are being incorrectly lodged. To address this, the ATO are extending their data matching program to capture information relating to residential property loans.
The extended program will now gather data on rental property loans for 2021-22 through to 2025-26 and will capture the following information:
- Client identification details (including names, addresses, phone numbers and date of birth)
- Loan account details (account numbers, BSBs, balances, total interest charges, total repayments, and commencement and end dates)
- Transaction details (transaction dates, transaction amounts, and whether the transaction was a debit or a credit on the account)
- Property details (address of the loan asset)
The collected information will be compared to taxpayer claims and returns, and will be collected from the big four banks, smaller banks that grant rental property investment loans, and other loan providers.
Who Will the ATO Share My Information With?
The ATO exchange data with Services Australia programs such as Centrelink and the Child support program, as well as other Government agencies under separate legislative provisions.
Your privacy is protected by the Privacy Act 1988 and the strict secrecy provisions of the Income Tax Assessment Act 1936, the Taxation Administration Act 1953 and other tax laws.
You can find more information on the data matching program on the ATO’s website. Alternatively, we are here to help! If you have any questions regarding this program or would like further information, please contact us on 03 5221 6399 or at info@davidsons.com.au.
This article was written by Personal Income Tax Specialist Janine Roberts.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.