• Matching millions

    The ATO has teamed with other government agencies to ensure it has the information it needs to identify people who are trying to avoid paying tax. This often involves data matching - bringing together data from different sources and comparing it.

    Each year the ATO receives details of payments made by employers, banks and other financial institutions as well as Centrelink and the Department of Veterans' Affairs. This information is used by the ATO to identify people who are receiving benefits they're not entitled to and to ensure they pay the right amount of tax.

    The ATO runs an extensive data matching program using a range of third-party sources to verify information reported in income tax returns and activity statements. The program also uses overseas data sourced by other government partners through international treaties. Data, including an increasing range of financial transactions, is automatically exchanged with more than 40 foreign tax administrations.

    The ATO's data matching program also covers a wide range of professions, trades and industries, as well as tax issues and risks. Data sources come from professional associations, corporations and government agencies.

    In the past few years, projects have included the furniture removal and fishing industries, as well as auction houses, taxis, mining, security, clubs and pubs, motor vehicles, luxury boats, antiques and art, and financial planning.

    For individuals and businesses, the data matching program includes projects designed to address specific tax issues such as the scrutiny of property sales to detect property development and capital gains tax risks. Projects also analyse indicators of lifestyle and wealth such as the ownership of luxury vehicles, marine vessels and aircraft.

    In 2007-08, the ATO received about 408 million records. Of these, 78 million were used in individual income matching.

    The program operates within strict privacy guidelines, including the secrecy provisions and other legislation that regulates the exchange of data among agencies and the use of tax file numbers when comparing personal information held by the ATO with data held by other agencies.

    'Data matching has been a successful part of our strategy for identifying and dealing with non-compliance for a long time', said the ATO's Deputy Commissioner for Serious Non-Compliance, Michael Cranston.

    'By comparing data from other sources with the taxpayer records, we can detect people who are failing to lodge returns or disclose income', he said.

    Sources far and wide

    Sources of information for the ATO's data matching programs include:

    • employers, labour hire firms, building contractors and WorkCover authorities
    • industry registrations, professional associations and various licensing bodies
    • land, real estate and property-related sources, including titles offices, planning authorities and tenancy agreements
    • government agencies, including the Australian Securities and Investments Commission, and
    • banks and other financial institutions, the Australian Securities Exchange, share registers and managed investment funds.

    Case study: Centrelink

    Centrelink is one of the key agencies that works with the ATO on its data matching strategy.

    Centrelink provides the ATO with information about clients who have outstanding welfare debts. The ATO is then able to intercept income tax refunds otherwise due to these taxpayers, and deducts the amount of the debts.

    At the same time, the ATO supports Centrelink by providing income and/or employment details of welfare recipients.

    Data is provided via regular file downloads to Centrelink under the Data Matching Program Assistance and Tax Act 1990.

    Data matching has provided significant outcomes for Centrelink, as shown in this table*.

    Agency

    Financial year 2008

    Financial year 2009
    (at 31 March)

    Centrelink

    Number

    $

    Number

    $

    Compliance (number of compliance events)*

    412,000

    $754
    million

    302,188

    $571
    million

    Fraud
    (number of fraud events detected)

    5,562

    $22
    million

    2,854

    $14
    million

    Refund intercepts

    37,000

    $26
    million

    34,984

    $35
    million

    TOTAL

    454,562

    $802 million

    340,026

    $620
    million

    * Compliance events occur when Centrelink information is matched with data from other sources such as the ATO, the Department of Immigration and Customs, births, deaths and marriage registries, corrective services and information reported by members of the public.

      Last modified: 28 Jan 2010QC 28245