ATO Data Matching
Third Party Reporting Legislation
Once upon a time, financial information was not readily available and the Australian Taxation Office (ATO) relied on the honesty of taxpayers when preparing and lodging their tax returns.
In the days before that, ATO assessors would sit and ‘mark’ the tax returns.
Thankfully those days are long gone.
These days commerce is undertaken online and checks and balances are provided by digital analysis and the ATO’s digital reach now extends across the internet and international borders.
A New Reporting Regime
Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015 was given royal assent on 30 November 2015.
This legislation has four main parts to it and Schedule (or “Part”) 4 is about Third Party Reporting.
It was introduced to require third parties to report transactions of real property, shares and units, business transactions made through payment systems and government grants and payment data directly to the ATO.
The legislation has been in place for almost one year.
From 1 July 2016, the states and territories of Australia are obliged to report information about transactions to the ATO pertaining to the following:
Real Property Transactions
The regime applies to all real property transfers executed. State and Territory Revenue Authorities and Land Titles Offices are required to report land transfers within their jurisdiction to the ATO.
In NSW, this information will be collected through a ‘Land Tax Certificate’ which is required to be obtained for every sale of land.
Government grants and payments
Government entities are required to report information about the grants they make to ABN holders and payments for services provided. The start date for collection of data is 1 July 2017.
Business Transactions made through E-Payment Systems
Administrators of payment systems will be required to report transactions they facilitate on behalf a business where the business is receiving a payment, providing a refund or cash to a customer of the business.
Reporters will need to commence collecting the required data from 1 July 2017.
Unit trust transactions
The Australian Securities Investments Commission (ASIC), stockbrokers, share registries, trustees and fund managers will be required to report on the transfer of all shares or units in unit trusts.
The start date for reporting was 1 July 2016 for ASIC.Managed Funds and Trustees reporting through an Annual Investment Income Report will need to report by 31 October 2018.
All other reporters will need to commence collecting the required data from 1 July 2017 with the first annual report due for submission by 31 July 2018
What does this mean for our clients?
In the age of data matching, big data and digital footprints its important to consider that the regulator does not always get it right. Sometimes they add one and one and end up with three! An incorrect assumption can be made and you as the tax payer can end up with a query about a transaction.
By ensuring you (as the client) maintain appropriate records; any ATO queries can be easily addressed without excessive costs.
Its important the tax payer maintains evidence of all major transactions so anomalies can be easily explained.
If you end up with an erroneous query from the regulator, stay calm and contact your advisor or accountant.
If you as the taxpayer are undertaking transactions which create anxiety it is important to discuss with your adviser, so that they can properly identify whether any particular activity you are undertaking is likely to be seen by the ATO as unusual and worthy of further investigation.
A comprehensive list of the ATO’s data matching protocols can be found here: https://www.ato.gov.au/General/Gen/Data-matching-protocols/