About data matching
Data matching is a powerful administrative and law enforcement tool. We receive data from a variety of third-party sources, including banks, financial institutions and other government agencies. This information is compiled electronically, validated, analysed and used for a range of education and compliance activities.
Our data-matching programs are designed to increase community confidence in the integrity of the tax system.
We use the data to:
- pre-fill tax returns, making it easier for everyone to lodge their tax
- help individuals and businesses understand their tax obligations, including registration, lodgment, reporting and payment
- protect honest businesses from unfair competition
- detect fraud against the Commonwealth and recover debt
- assess the levels of voluntary compliance of individuals and businesses with their tax obligations.
We run our data matching programs throughout the year, specifically when you lodge your tax return as well as after you receive your tax assessment.
We validate this data and match it against our own information to identify where people and businesses may not be reporting all their information correctly.
If we check your information, it doesn’t automatically mean we think you're dishonest in your tax affairs. If the data doesn’t match, we may contact you to find out why.
If you haven't reported all your income, or if you've made a mistake with your tax records, you should correct the mistake or amend a return.
Using data to check tax returns
We data matching infomation we receive against tax returns, we look for:
- interest and investment income
- employment income
- government payments
- capital gains tax from the disposal of shares and property
- employment-related foreign source income
- taxable government grants and payments
- payments made to contactors in the building and construction industry
- private health fund information
- distributions from partnerships, trusts and managed funds.
We may identify discrepancies:
- when you lodge your tax return, if it differs from the pre-filled information
- after your tax assessment has been finalised.
When we identify a discrepancy (for example, interest income not declared in a tax return), we also check if the amount has been placed at another label by mistake.
If you change pre-filled data when you lodge your tax return, we may adjust it back if we have a high level of confidence in the information we've received.
In some instances, we may contact you about a discrepancy. We'll provide you with the details of the data that's been matched. You'll then have an opportunity to check your records to confirm the correct amount.
Where a person has made an error due to poor record keeping or a misunderstanding of the law, we work with them to correct their tax return and to improve their understanding of their obligations.
Sources of third-party information
We collect information from a wide range of third-party sources, both public and private, with more than 600 million transactions reported to us annually.
Examples of third-party sources and the information they provide include the following.
- 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 our 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 specialised 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
Access our full list of data-matching protocols.
Some organisations (such as banks, employers, and other government agencies) have a legal obligation to report your information to us so that it can be used for tax purposes. This is known as legislated data collection.
We also have powers to collect information for specific data-matching progams designed to address specific industries, issues or risks (such as for private health insurance and Medicare levy, credit and debit cards, motor vehicles, online selling and share market transactions). This is known as 'special purpose acquisition data'.
In addition, we exchange information with our international treaty partners to ensure correct reporting of income earned overseas by Australian residents and income earned in Australia by foreign residents. We also exchange data with other Australian Government agencies.
In all our data-matching activities we work closely with data suppliers to ensure that only relevant information is provided to us.
Validating the data we receive
Legislated data collected from third-party providers is sent to us in reports through a secure electronic channel. Each report contains information such as tax file number (TFN), name and date of birth, to allow us to match it to the correct person.
Integrity checks are conducted to confirm the quality of the data, including:
- checking the data provider’s identity to prevent possible fraudulent reports
- checking for duplicate reports, so we don’t end up with two sets of data – if a second data set is received, we generally reject the earlier one
- matching reported data to valid TFN records in our systems
- ensuring overall integrity by identifying recurring quality issues in the data collecting and matching process.
Once a report has passed our integrity checks, we use algorithms and other analytical methods to refine the data. This validated data is then matched to information reported in tax returns.
The data we collect for specific data-matching projects is often sourced from providers' systems and may not be available in a format that can be readily processed by our systems. In these instances, we apply extra levels of scrutiny and analytics to verify the quality of the data before matching data to taxpayers' returns.
Your privacy
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. We also have an ATO privacy policy.
These laws prohibit our staff from accessing, recording or disclosing any persons' tax information except in the performance of their duties. Breaches of these laws can attract fines of up to $11,000 and jail sentences of up to 2 years.
We also adhere to the Privacy Commissioner's Guidelines on Data Matching in Australian Government AdministrationExternal Link. We do this by preparing and publishing a data-matching protocol for each of our programs that obtain information on about 5,000 individuals or more.
In broad terms, each protocol explains:
- the purpose of the program
- what data is collected
- which agencies or organisations will be providing the data
- how the data will be used.
Report a concern
You can use our Tip-off form to tell us anonymously if you suspect a person or business isn't doing the right thing.
This can include things like:
- skimming some, or all, of their cash takings
- running part of their business 'off the books'
- not reporting all their income.
We review all reports and take action where appropriate.