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  • Lifestyle assets data-matching protocol 2013-14 to 2019-20

    The ATO's lifestyle assets data-matching program has been in place since February 2016. Under the program, we have collected data on insurance policies for the 2013–14 and 2014–15 financial years, for certain classes of assets, including:

    • marine vessels
    • motor vehicles
    • thoroughbred horses
    • fine art
    • aircraft.

    We acquire data from insurance providers, to improve our compliance risk profiling of taxpayers and provide a holistic view of their assets and accumulated wealth. This protocol document outlines our approach to collecting a further five years of lifestyle assets data, up to and including 2019–20.

    All of our data-matching programs follow the Office of the Australian Information Commissioner’s (OAIC) Guidelines on data matching in Australian Government administration (2014). The guidelines assist Australian Government agencies to use data-matching as an administrative tool in a way that complies with the Australian Privacy Principles (APPs) and the Privacy Act 1988 (Privacy Act), and are consistent with good privacy practice.

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    Why we look at lifestyle assets

    The lifestyle assets data-matching program will allow us to identify and address a number of taxation risks, including:

    • taxpayers accumulating or improving assets with insufficient income reported in their tax returns to show the financial means to pay for them
    • income tax and capital gains tax (CGT) – taxpayers disposing of assets and not declaring the revenue and/or capital gains on those disposals
    • goods and services tax (GST) – taxpayers may be purchasing assets for personal use through their business or related entities and claiming GST credits they are not entitled to
    • fringe benefits tax (FBT) – taxpayers may be purchasing assets through their business entities with no apparent nexus with their business activities, but rather applying those assets to the personal enjoyment of an associate or employee giving rise to a fringe benefits tax liability
    • self-managed super funds (SMSFs) may be acquiring assets but applying them to the benefit of the fund's trustee or beneficiaries.

    Program objectives

    The objectives of this data-matching program are to:

    • promote voluntary compliance and increase community confidence in the integrity of the tax and superannuation systems
    • assist with profiling to provide compliance staff with a holistic view of a taxpayer’s wealth
    • identify possible compliance issues with income tax, CGT, FBT, GST and superannuation obligations
    • determine avenues available to assist in debt management activities
    • gain insights from the data to help to develop and implement treatment strategies to improve voluntary compliance; which may include educational or compliance activities as appropriate
    • identify and educate those individuals and businesses who may be failing to meet their registration and/or lodgment obligations and assist them to comply
    • help ensure that individuals and businesses are fulfilling their tax and superannuation reporting obligations.

    How we obtain and use the data

    The data in this program will not be used directly to initiate automated compliance activity. Taxpayers selected for our compliance activities are identified through other methodologies.

    The lifestyle assets data is made available to ATO compliance staff to support our risk profiling of the selected taxpayers. Existence of an insurance policy may prompt the compliance officer to pursue a particular line of enquiry.

    Our previous related programs

    The ATO has been conducting similar programs since 2011, including the lifestyle assets data-matching program which commenced with collection of data for the 2013–14 and 2014–15 financial years.

    Data obtained through our compliance processes has proved useful in enhancing our interactions with taxpayers by providing us with a more comprehensive view of a taxpayer's wealth. Having information about assets prior to our compliance activities commencing, helps us to identify higher risk instances where the financial information returned by a taxpayer does not reflect their accumulated assets. It improves our understanding of a client’s wealth and assists us to apply relevant tax laws to their situation.

    Data providers

    The ATO is the matching agency and the sole user of the data obtained in the course of this data-matching program.

    Data will be obtained from the following insurers:

    • AAMI
    • AIG
    • Allianz
    • Apia
    • Bingle
    • CGU Insurance
    • Chubb Insurance
    • Club Marine
    • Coles Insurance
    • CommInsure
    • GIO
    • Insuremyride
    • Just Car Insurance
    • Lumley
    • Nautilus Marine
    • NRMA
    • QBE
    • RAA Insurance
    • RACQ
    • RACV
    • RAC Insurance
    • Resilium
    • SGIC
    • SGIO
    • Shannons
    • Suncorp
    • Swann Insurance
    • Vero
    • WFI
    • Youi
    • Zurich Australian Insurance

    Eligibility as a data provider

    We adopt a principles-based approach to ensure that our selection of data providers is fair and transparent. Inclusion of a data provider is based on the following principles:

    • the data owner or its subsidiary operates a business in Australia that is governed by Australian law
    • the data owner provides insurance services
    • the data owner provided insurance services for the years in focus
    • where the client base of a data provider does not present a risk, or the administrative or financial cost of collecting the data exceeds the benefit the data may provide, the data owner may be excluded from the program.

    The data providers for this program will be reviewed annually against the eligibility principles.

    Our formal information gathering powers

    The data will be obtained under our formal information gathering powers contained in section 353-10 of Schedule 1 to the Taxation Administration Act 1953.

    This is a coercive power that obligates the data providers to provide the information requested. We will use the information for tax and superannuation compliance purposes.

    Privacy Act

    Data will only be used within the limits prescribed by Australian Privacy Principle 6 (APP6) contained in Schedule 1 of the Privacy Act and in particular:

    • APP6.2(b) – the use of the information is required or authorised by an Australian law
    • APP6.2(e) – the ATO reasonably believes that the use of the information is reasonably necessary for our enforcement-related activities.

    Keeping data safe

    The data-matching program will be conducted on our secure systems that comply with the requirements of:

    All ATO computer systems are strictly controlled according to Australian Government security standards for government ICT systems, with features including:

    • system access controls and security groupings
    • login identification codes and password protection
    • full audit trails of data files and system accesses.

    We will use our secure internet-based data transfer facility to obtain the data from source entities.

    Data elements collected

    Data will be collected for the following classes of assets, where the asset value is equal to or exceeds the nominated thresholds.

    Table 1: Asset value thresholds

    Asset class

    Minimum asset value threshold

    Marine vessels

    $100,000

    Motor vehicles

    $65,000

    Thoroughbred horses

    $65,000

    Fine art

    $100,000 per item

    Aircraft

    $150,000

    The classes of data assets may be expanded and this list updated as we identify and obtain data from other general and specialist insurers.

    We will negotiate with the selected data providers individually to obtain data held within their systems. The collected data may contain all or a selection of the fields listed below.

    Client identification details - individuals

    • Given and surname(s) (if more than one name on the policy)
    • Date(s) of birth
    • Addresses (residential, postal, other)
    • Australian business number (if applicable)
    • Email address
    • Contact phone number

    Client identification details - non-individuals

    • Business name
    • Addresses (business, postal, registered, other)
    • Australian business number
    • Contact name
    • Contact phone number
    • Email address

    Policy details

    • Policy number
    • Policy inception date
    • Start date of current policy
    • End date of current policy
    • Total value insured
    • Purchase price of the property insured
    • Registration number or identification number of the property
    • Insurance category
    • Policy cost
    • Description of the property insured
    • Primary use type

    Number of records

    The number of individuals affected by this data collection is expected to be approximately 350,000 individuals each financial year.

    Data quality

    We anticipate that the data quality will be of a high standard. Insurance companies have sophisticated computer systems, and they have prudential and due diligence obligations to maintain the quality of their records, especially for actuarial purposes.

    The data is sourced from providers' systems and may not be available in a format that can be readily processed by our systems. We apply extra levels of scrutiny and analytics to verify the quality of the data. This includes but is not limited to:

    • meeting with data providers to understand their data holdings, including their data use, data currency, formats, compatibility and natural systems
    • sampling data to ensure it is fit for purpose before fully engaging providers on task
    • verification practices at receipt of data to check against confirming documentation; we then use algorithms and other analytical methods to refine the data.

    Data is transformed into a standardised format and validated to ensure that it contains the required data elements prior to loading to our computer systems. We undertake program evaluations to measure effectiveness before determining whether to continue to collect future years of the data or to discontinue the program.

    To assure data is fit for consumption and maintains integrity throughout the data-matching program, it is assessed against the 11 elements of the ATO data-quality framework:

    • accuracy
    • completeness
    • consistency
    • currency
    • precision
    • privacy
    • reasonableness
    • referential integrity
    • timeliness
    • uniqueness
    • validity.

    Data retention

    The collection of data under this program includes all financial years from 2013–14 to 2019–20. The data collection is annual following the end of each financial year.

    Due to the number of data providers, we collect data periodically. We work co-operatively with the data providers and aim to balance our requests against peaks and troughs of demand in a data provider's own business.

    The collection of 2013–14 and 2014–15 data under the original program was conducted between February and April 2016. The ATO was granted exemption by the Privacy Commissioner to retain the data for three years in 2016 and a further two years in 2019. The total retention period was for five years from the receipt of all verified data files from the data providers. The exemption request was required to satisfy the National Archives of Australia's General Disposal Authority 24 (GDA24) – Records relating to data matching exercises.

    GDA24 has now been revoked. We destroy data that is no longer required, in accordance with the Archives Act 1983, the records authorities issued by the National Archives of Australia, both general and ATO-specific.

    We will retain each financial year’s data for five years from receipt of the final instalment of verified data files from the data providers. The data is required for this period as:

    • retaining data for five years enables us to conduct long-term trend analysis and risk profiling of the asset management and disposal practices. This data improves a holistic view of a taxpayer’s assets and accumulated wealth
    • an asset profile of taxpayers will be produced as the data becomes available; this enhances our risk assessment and compliance capability.
    • the data enhances our ability to identify taxpayers who may not be complying with their tax and superannuation obligations, which is integral to the protecting the integrity of the tax and superannuation systems
    • retaining data for five years supports our general compliance approach of reviewing an assessment within the standard period of review, which also aligns with the requirements for taxpayers to keep their records
    • the data is also used in multiple risk models, including models that establish retrospective profiles over a multiple years aligned with period of review.

    While increased data-retention periods may increase the risk to privacy, we have a range of safeguards to appropriately manage and minimise this. ATO systems and controls are designed to ensure the privacy and security of the data we manage.

    See also:

    Public notification of the program

    We will notify the public of our intention to collect 2015–16 to 2019–20 data, which is additional to the lifestyle assets data-matching program previously gazetted in February 2016, by:

    • publishing a notice in the Federal Register of Legislation gazettes in the week commencing 16 December 2019
    • publishing this data-matching program protocol on our website at ato.gov.au/dmprotocols
    • advising the data providers that they
      • can notify their clients of their participation in this program
      • should update their privacy policies to note that personal information is disclosed to the ATO for data-matching purposes.
       

    Gazette notice content

    The following information about the data-matching program appears as a gazette notice in the Federal Register of Legislation.

    Gazette notice: Commissioner of Taxation – Notice of a data-matching program

    The Australian Taxation Office (ATO) will acquire data from insurance policies for the following assets where the value is equal to or exceeds nominated thresholds.

    Table: Asset value thresholds

    Asset class

    Asset value threshold

    Marine vessels

    $100,000

    Motor vehicles

    $65,000

    Thoroughbred horses

    $65,000

    Fine art

    $100,000 per item

    Aircraft

    $150,000

    The data to be collected under notice, for 2015–16 through to 2019–20, includes:

    • policy holder identification details (names, addresses, phone numbers, dates of birth, etc)
    • insurance policy details (policy number, start and end date, asset insured, physical location of the asset, etc).

    We estimate that records relating to approximately 350,000 individuals will be obtained each financial year.

    The data will be acquired and matched to improve our risk profiling of taxpayers and provide a holistic view of assets and accumulated wealth. The purpose of this program is to ensure that taxpayers are correctly meeting their tax and superannuation obligations in relation to asset transactions and ownership. These obligations may include registration, lodgment, reporting and payment responsibilities.

    The objectives of this program are to:

    • promote voluntary compliance and increase community confidence in the integrity of the tax and superannuation systems
    • assist with profiling to provide compliance staff with a holistic view of a taxpayer’s wealth
    • identify possible compliance issues with income tax, capital gains tax, fringe benefits tax, goods and services tax and superannuation obligations
    • determine avenues available to assist in debt management activities
    • gain insights from the data to help to develop and implement treatment strategies to improve voluntary compliance; which may include educational or compliance activities as appropriate
    • identify and educate those individuals and businesses who may be failing to meet their registration and/or lodgment obligations and assist them to comply
    • help ensure that individuals and businesses are fulfilling their tax and superannuation reporting obligations.

    A document describing this program is available at ato.gov.au/dmprotocols.

    This program follows the Office of the Australian Information Commissioner’s Guidelines on data matching in Australian Government administration (2014) (the guidelines). The guidelines include standards for the use data-matching as an administrative tool in a way that complies with the Australian Privacy Principles (APPs) and the Privacy Act 1988 (Privacy Act), and are consistent with good privacy practice.

    A full copy of the ATO’s privacy policy can be accessed at ato.gov.au/privacy.

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      Last modified: 18 Dec 2019QC 47951