Military super – 2010–11 to 2021–22 data-matching program
Recent Federal Court decisions relating to the tax and superannuation treatment of specific invalidity benefit payments under some military superannuation schemes has identified the need by the Australia Taxation Office (ATO) for data from the Commonwealth Superannuation Corporation to support taxpayers in remediating their affairs as a result of this ruling.
Normally, to remediate these matters we would require taxpayers to provide supporting information. For this issue, this would likely result in each impacted taxpayer contacting their superannuation fund for supporting documentation to provide to the ATO.
To remove this burden, we are implementing a streamlined approach where we will collect the required information from the superannuation fund directly. This will minimise the effort required by taxpayers seeking to have their matters remediated. It will also minimise the overall administrative burden on the superannuation fund.
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.
The ATO has responsibility to protect public revenue and maintain community confidence in the integrity of the tax system.
Our data-matching programs help us to undertake these responsibilities.
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Why we look at Military super
The Military super data-matching program will allow us to address several taxation risks including:
- our inability to identify individuals impacted by court decisions regarding the taxation of invalidity benefit payments
- holding insufficient information to enable remediation of tax and super in line with court decisions regarding the taxation of invalidity benefit payments.
The objectives of this data-matching program are to:
- identify individuals impacted by court decisions regarding taxation of invalidity benefit payments
- help the ATO in simplifying the taxation and superannuation remediation for the impacted population where possible, to make the process more streamlined for impacted individuals or facilitate streamlined manual remediation.
How we use the data
The data from this program will be used to:
- identify individuals impacted by the court decision
- provide information (that the ATO does not currently hold) that will enable remediation of tax and superannuation positions.
A phase one remediation strategy (pilot) will allow impacted individuals to come forward and seek income tax remediation. This involves educational elements to ensure an understanding of potential adverse impacts of remediation. In most cases these amendments will result in a credit assessment, or no change to an individual's assessment. However, depending on each individual's circumstances there could be a debit outcome.
Phase two remediation will capture the remaining individuals who require income tax remediation but may be unaware of this process. The data from CSC will help us identify these individuals who have not come forward during phase one. We will contact them to help them understand their income tax remediation options.
A phase three may be required to ensure all impacted individuals are aware and have an opportunity to be involved. We will again contact any of these individuals who have not previously come forward and undertake the income tax remediation if they choose.
Data will also be used for remediation of superannuation for impacted individuals.
Our previous related programs
There are no previously related programs. A pilot will be conducted as phase one of remediation. Assessment processes identified from this data will support identification and remediation work. The outcomes from the phase one pilot will inform decisions around how phase two of remediation may be conducted.
The ATO is the matching agency and sole user of the data obtained in the course of this data-matching program.
Data will be obtained from the following:
- Commonwealth Superannuation Corporation
The data will be obtained through co-operation with the Commonwealth Superannuation Corporation in accordance with section 254(2) of the Superannuation Industry (Supervision) Act (SISA) as well as 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.
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 invalidity benefit payments.
The collected data may contain all or a selection of the fields listed below.
Client identification details - individuals
- Given and surname
- Date of birth
- Date of death
- Tax file number
- Email address
- Phone number
- Bank BSB and account number (used for identity matching purposes only)
- Member account number
- Unique superannuation identifier
- Product number
- Scheme name
- Scheme ABN
- Discharge date
- Pension payment dates
- Pension reclassifications
- Pension commencement date
- Pension cancellations
- Pension reason
- Preservation age
- Taxable (taxed and untaxed elements) amounts paid
- Disability superannuation benefit indicator
- Days to retirement
- Service days
- Date of determination of reclassification for entitlement to invalidity
- Date of determination of disability
- Accumulation phase value
Number of records
The number of individuals affected by this data collection is expected to be approximately 16,000 individuals each financial year.
We anticipate data quality will be of a high standard. Super funds have sophisticated computer systems, as well as prudential and due diligence obligations to maintain the quality of their records. Super funds also report regularly to the ATO regarding their members. This involves member verification via the Member Account Attribute Service and SuperTICK. A sample of the data confirms the high data quality for 2010–11 and later financial years.
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 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 – the data correctly represents the actual value
- completeness – all expected data in a data set is present
- consistency – data values are consistent with values within the data set
- currency – how recent the time period is that the data set covers
- precision – the level of detail of a data element
- privacy – access control and usage monitoring
- reasonableness – reasonable data is within the bounds of common sense or specific operational context
- referential integrity – when all intended references within a data set is valid
- timeliness – how quickly the data is available for use from the time of collection
- uniqueness – if duplicated files or records are in the data set
- validity – data values are presented in the correct format and fall within predefined values.
The collection of data under this program includes all financial years from 2010–11 to 2021–22. The data collection is once-off (regular annual/quarterly reporting is not required).
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 for the protection of public revenue as:
- retaining data for five years enables us to allow individuals a reasonable time to consider their personal circumstances, understand the impacts and if desired seek financial advice prior to remediation, and to then remediate complex matters.
- 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
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.
Public notification of the program
We will notify the public of our intention to collect 2010–11 to 2021–22 data by:
- publishing a notice in the Federal Register of Legislation gazettes in the week commencing 1st March 2021
- publishing this data-matching program protocol on our website at ato.gov.au/dmprotocols
- advising the data provider 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 invalidity benefit payments data from Commonwealth Superannuation Corporation for 2010–11 through to 2021–22.
The data items include:
- identification details (name, date of birth, date of death, tax file number, email address, phone number, bank BSB and account number)
- transaction details (scheme name, member account number, unique superannuation identifier, product number, scheme ABN discharge date, pension payment dates, pension reclassifications, pension commencement date, pension cancellations, pension reason, preservation age, taxable (taxed and untaxed elements) amounts paid, disability superannuation benefit indicator, days to retirement, service days, date of determination of reclassification for entitlement to invalidity, Date of determination of disability, accumulation phase value).
We estimate records relating to approximately 16,000 individuals will be obtained each financial year.
The data will be acquired and matched to remediate tax and superannuation treatment of certain superannuation schemes invalidity benefit payments following recent court decisions. These obligations may include registration, lodgment, reporting and payment responsibilities.
The objectives of this program are to:
- identify individuals who are impacted by court decisions regarding the taxation of invalidity benefit payments
- help individuals understand the potential impact of changes to the tax and super treatment of their invalidity benefit payments, as well as the potential impacts of remediation
- automate taxation and superannuation remediation for the impacted population where possible, to make the process simpler and quicker for impacted individuals, or facilitate streamlined manual remediation
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.
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