Overview of our compliance approach
We have a responsibility to the government and the community to ensure that everyone pays the correct amount of tax and excise under the law.
We do checks to test taxpayer compliance with the law including audit and verification programs and computer based matching of your information with that obtained from other parties.
Data matching is a powerful administrative and law enforcement tool. It allows information from a variety of sources to be brought together, compiled and applied to a range of public policy purposes at vastly lower costs than manual methods.
In revenue collection agencies such as ours, it helps us to identify people who are not complying with their obligations, and to detect fraud on the Commonwealth.
We have a twofold approach to compliance:
- to maximise voluntary compliance by making it as easy as possible to understand and meet obligations
- to deter, detect and address non-compliance.
We align all of our data matching activities to our published Compliance program, and as we expect that data matching will make a major, continuing contribution to our compliance effort, we will explore new sources of data while continuing to expand our existing programs.
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To view a short video outlining how we use data matching to identify people who do the wrong thing, click on the image below (WMV, 7.67MB, 2min, 13sec).
Alternatively, you can read the full transcript.
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What data do we acquire?
Our traditional sources of data include investment income information from banks, financial institutions and investment bodies, employment information and welfare payments. The supply of this data is authorised by legislation. We match this data with our own information to detect those who may not be correctly disclosing all of their income.
We also undertake large scale activities involving information exchange with other government agencies. These exchanges of information are authorised by legislation.
We also have an agreement with Medicare Australia who provide data to enable us to administer the 30% health insurance incentives rebate, and have online access to information held by the Australian Securities & Investment Commission (ASIC) and banking transactions captured by AUSTRAC.
As well we undertake data matching projects relating to particular risks, issues or industries. For example, these could include scrutiny of property sales to detect capital gains issues or payments made to those involved in the horse racing industry.
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For more information, refer to:
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Can we obtain whatever data we want?
Australian law gives the Commissioner of Taxation, or an officer authorised by the Commissioner, the right to full and free access to buildings, places, documents and other papers for any of the purposes of the Acts the Commissioner administers.
Our policy is to use these powers, particularly when we obtain information from a third party.
We work closely with data suppliers so that only information which is relevant to the ATO is provided to us.
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For more information, refer to:
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What action do we take with data we obtain?
We compare externally sourced data with information that we already hold. If we check your information it does not mean we think you're dishonest in your tax affairs. But if we find discrepancies we'll take follow-up action.
We check the external data with information provided to us in tax returns or in business activity statements. We may use this information to detect people who are not in the tax system or are behind in meeting other obligations such as lodgment of documents, paying debts, meeting superannuation obligations and so on.
The data is also used to check trends within industries and helps us to focus on future compliance risks.
What about 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 law. These tax laws prohibit our staff from accessing, recording or disclosing any person's 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 two years.
As well, because data matching handles the personal information of so many individuals, we comply with the Privacy Commissioner's voluntary guidelines on data matching.
The protocols that we follow to protect your information include:
- approval of all external data matching by our senior managers
- publishing data matching protocols that describe many of our data-matching activities
- advertising these protocols in the Commonwealth Gazette
- advertising some data-matching activities in industry or other relevant publications
- secure storage of data-matching information
- proper disposal of information
- giving access only to authorised staff
- regularly reviewing progress of projects and checking that information is being properly used and protected
- providing the Privacy Commissioner with protocols for programs involving more than 5,000 individuals
- reporting to the Privacy Commissioner annually on programs involving 1,000 to 5,000 individuals.
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For more information:
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It's not worth the risk - video transcript
At the ATO, we're committed to ensuring that all Australian businesses have a level playing field. So it's important that everyone meets their tax obligations.
However, we know some people unfairly hide their income and avoid paying their fair share. These people cheat all Australian businesses that do the right thing.
We want to make sure that businesses that do the right thing are not disadvantaged by these unfair actions.
To achieve this, we conduct an extensive range of data-matching programs. Data matching is used to cross check a range of activities quickly, accurately and efficiently.
Bruce Quigley, Second Commissioner, Compliance:
Data-matching is used to make sure that people pay the correct amount of tax.
We have advanced technology, which enables us to match over 600 million transactions in the next financial year.
This includes the registration records of cars. We also get information from banks and other financial institutions. We also get information from state and territory Government departments about property transactions.
We compare all this data with the amount of income that's returned in tax returns and also the amount shown on activity statements to see that people aren't spending beyond their means and, therefore, not reporting all their income or paying the correct amount of GST.
With data matching, we can compare the lodgment and income history of the business with data matched from external sources.
We may also contact customers and suppliers of the taxpayer to request invoices, receipts, delivery addresses and payment details.
If we check your information, it doesn't automatically mean we think you're dishonest in your tax affairs. But if the data doesn't match, we'll contact you to find out why.
Where we discover someone has chosen to deliberately avoid their tax obligations, we will apply the full force of the law.
Bruce Quigley, Second Commissioner, Compliance:
With our sophisticated and ever increasing data matching capability, the message is clear. If you are not paying the correct amount of tax, you will be caught. It's just not worth the risk.
For more information about data matching, visit our website at www.ato.gov.au/datamatching
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Last Modified: Wednesday, 5 September 2012