• How we detect and deal with those who don't do the right thing

    We use various information sources and undertake a range of compliance activities to detect and deal with people or organisations not meeting their tax and superannuation obligations.

    We also receive information about tax avoidance from the community. If you know of someone who is not doing the right thing, you can report your concern and we will investigate.

    Next step:

    Action we undertake to detect those who don’t do the right thing include:

    • data matching information given to us by third parties about money you receive from wages, shares, sale of property and government payments against the information you have included in your tax return
    • a program of verification checks, both before and after refund payments are made, to identify incorrect and fraudulent refunds
    • clarifying our view to address emerging economies, particularly in relation to online services and the sharing economy and tax
    • using robust analytical models to compare your income and deduction claims to individuals or businesses in similar circumstances. We may ask you to clarify when income and claim patterns are outside of our expectations.

    For small businesses our activities also include:

    • investigating when employees tell us they may not have received their full super guarantee entitlements, as well as using our own data to identify employers who are likely to not be meeting their super guarantee obligations
    • using the small business benchmarks along with other risk indicators to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income
    • investigating concerns reported by people who think there could be inappropriate or unfair business practices occurring.

    Action we undertake to deal with those who don’t do the right thing include:

    • imposing penalties and charging you interest if you don’t fully meet your responsibilities. If you've made an honest mistake we will take this into account. However if you deliberately try to avoid tax we'll take much firmer action (this can include prosecution). If you do find that you have made an error you should tell us as soon as you can - see how to correct a mistake or amend a return.
    • taking firmer action, including using the full force of the law, for those who abuse the tax and super systems. See results of our action against tax crime for examples.

    Find out about:

    See also:

    Individuals

    For individual taxpayers our activities include:

    • writing to you to ask you to review your reported income and deductions
    • undertaking a review or audit where you have not told us about income that you have earned, or it seems that you may have incorrectly claimed deductions.

    Small businesses

    For small businesses our activities include:

    • investigating when employees notify us they may not have received their full super guarantee entitlements from their employer
    • using our own data to identify employers who are likely to not be meeting their super guarantee obligations (see our compliance approach for more detail).

    Privately owned and wealthy groups

    For privately owned and wealthy groups our activities include:

    • applying a risk differentiation framework to determine the level of our interactions with you, based upon our understanding of your risk position, circumstances, choices and behaviours
    • contacting you in situations where we identify a potential issue with your tax affairs to resolve or better understand the matter. If the matter is not resolved and requires further examination we will generally conduct a review or an audit.
    • conducting deeper investigations on particular matters of potential concern. For example, we have established a Trusts Taskforce to investigate aggressive tax avoidance and evasion using trusts.

    Publicly listed businesses

    For publicly listed businesses our activities involve applying a risk-differentiation framework to determine the level of our interactions with you based upon our understanding of your risk position, circumstances, choices and behaviours.

    Not-for-profit organisations

    For not-for-profit organisations our activities involve dealing with areas of concern including where the organisation has incorrectly accessed tax concessions, such as:

    • providing assistance to help them get things right
    • where appropriate, cancelling entitlements to access tax concessions.

    Super funds

    For super funds our activities include:

    • reviewing contraventions reported as a result of annual independent audits of self-managed super funds (SMSFs) by approved SMSF auditors and risks identified from our data holdings. We use a risk differentiated approach to deal with non-compliance of SMSFs based on the overall risk posed by a fund
    • monitoring the compliance of approved SMSF auditors and, if we identify a failure to adequately and properly perform their duties, referring them to the Australian Securities & Investments Commission (ASIC) for investigation
    • identifying and pursuing intermediaries who seek to exploit vulnerabilities in the system, including detecting fraud or illegal early release of super.

    Large super funds generally try to do the right thing, however on occasion we may identify a significant issue or the funds themselves may voluntarily disclose reporting errors they identify. In this situation:

    • we work closely with the funds and their administrators to correct any issue and ensure the accuracy and completeness of member information reported to us
    • we provide an annual tailored diagnostic report to all large super funds which helps them understand how they performed in meeting their reporting obligations to the ATO – this report helps us, and the fund address areas of concern and improves reporting performance. The large super fund industry report summarises the collective outcomes from our risk differentiation framework (RDF) and each tailored diagnostic report.

    Tax professionals

    For tax professionals our activities include:

    • ongoing practitioner compliance programs focused on:   
      • practice management, including lodging clients’ returns by lodgment program due dates
      • return preparation processes, including omission of income and refund fraud
      • information security
      • promotion of tax avoidance schemes
       
    • identifying and dealing with unregistered tax and super professionals
    • where appropriate, undertaking audit action, civil litigation, imposing interest and penalties, and prosecution.
    Last modified: 08 Aug 2017QC 44380