• Credit and debit card data matching program protocol - 2014-15 financial year

    1 Data matching guidelines

    The Australian Taxation Office (ATO) is committed to voluntarily complying with the Guidelines on data matching in Australian government administration (2014) (guidelines) published by the Office of the Australian Information Commissioner (OAIC).

    The credit and debit card data matching program protocol is prepared and published in accordance with these guidelines.

    2 Overview

    The credit and debit card data matching program is designed to increase community confidence in the integrity of the tax system, to promote voluntary compliance, to help protect honest businessaes from unfair competition and enable the ATO to assess the level of taxation compliance of individuals and businesses. The credit and debit card data has been collected since the 2008-09 financial year.

    Details will be requested from twelve Australian financial institutions of all credit and debit card payments received by merchants for the 2014-15 financial year.

    The ATO will match the credit and debit card payment data provided by the twelve financial institutions against ATO records to identify businesses that may not be meeting their registration, reporting, lodgment and/or payment obligations.

    3 Purpose & objectives

    3.1 Purpose

    The purpose of this data matching program is to ensure that taxpayers are correctly meeting their taxation obligations in relation to business income. These obligations include registration, lodgment, reporting and payment responsibilities.

    3.2 Objectives

    Objectives of the credit and debit data matching program are to:

    • promote voluntary compliance with taxation obligations and increase awareness in the community of the ways the ATO uses data matching to address non-compliance, by publishing this program protocol
    • identify liquidated or de-registered businesses that are continuing to trade
    • assist in identifying ‘cash only’ businesses, by exception
    • assist the ATO in building intelligence about businesses including broader risk, trend and strategic analysis
    • ensure compliance with registration, lodgement, correct reporting and payment of taxation obligations.

    The ATO is seeking to obtain external data to cross-reference with its own internal data to identify relevant cases for administrative action, including compliance and educational strategies.

    4 Agencies & entities involved

    4.1 Matching & primary user agency

    The ATO is the matching agency and will generally be the sole user of the data. The data matching program will be conducted using the ATO’s secure computer systems and in accordance with approved policies and procedures.

    In very limited and specific circumstances as contained in Division 355 of Schedule 1 to the Taxation Administration Act 1953, the ATO may provide individual records to other agencies, including state and territory revenue authorities and law enforcement agencies. These other agencies include those responsible for:

    • Administering social welfare, health and safety programs for the purposes of determining eligibility to certain types and benefits and rebates
    • Determining entitlement to rehabilitation and compensation payments.

    Each request for information by these other government agencies will be assessed on its merits and must be for an admissible purpose allowed for by taxation laws.

    4.2 Source entities

    Data will be obtained from:

    • American Express Australia Limited
    • Australia and New Zealand Banking Group Limited
    • Bank of Queensland Limited
    • Bendigo and Adelaide Bank Limited
    • BWA Merchant Services Pty Ltd
    • Commonwealth Bank of Australia
    • Diners Club Australia
    • National Australia Bank Limited
    • St George Bank
    • Suncorp-Metway Limited
    • Tyro Payments Limited
    • Westpac Banking Corporation

    A principle based approach has been adopted to ensure that inclusion as a source entity is fair and transparent.

    Inclusion of data providers in the program 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 merchant facilities for its clients and maintains records of electronic payments received by those clients. The data owner provided these facilities for the year in focus.
    • Where the client base of a data owner does not present an omitted income 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.

    In accordance with guideline 5.9 the ATO has also advised that the source entities to take reasonable steps to notify the general public of their participation in this data matching program. To assist with this, the ATO will:

    • Provide written materials the data provider can provide to their clients advising of their participation in this program
    • Advise data providers to update their privacy policies to note that personal information is disclosed to the ATO for data matching purposes.

    5 Data issues

    5.1 Data elements

    The following data elements, where available, will be requested from data providers, in relation to all merchants in the 2014-15 financial year:

    Merchant record fields:

    • Merchant ID and group level (parent) ID
    • Surname, first name and other given names
    • Date of birth
    • Merchant legal name
    • Business/residential address
    • Postal address
    • Merchant’s ABN or ACN
    • Merchant’s trading name
    • BSB number and account number (for the account where merchant proceeds are credited)
    • Merchant contact name
    • Merchant contact phone number
    • Merchant Category Code and description
    • Merchant’s facility start date.

    Transaction monthly records per merchant ID:

    • Merchant ID
    • Month of transactions
    • Credit amounts (monthly sale amounts for MasterCard, VISA, Japan Credit Bureau, China Union Pay, American Express and Diners Club credit cards)
    • Credit count (monthly count of credit card sales)
    • Debit amount (monthly sale amounts for debit (EFTPOS) transactions)
    • Debit count (monthly count of all debit (EFTPOS) sales)
    • Refund amount (monthly credit and debit refund amounts)
    • Refund count (monthly count of all credit and debit refund transactions)
    • Card Not Present amount (monthly sale amounts where card was not present)
    • Card Not Present count (monthly count of credit and debit sales where card was not present)
    • Cash out included (Y/N)
    • Cash out only amounts (monthly ‘cash out only’ amounts)
    • Cash out only count (monthly count of ‘cash out only’ amounts)
    • Cash out components (monthly cash out components of a combined purchase with cash out)

    A full copy of the data dictionary is included at appendix A.

    5.2 Number of records

    It is estimated that the total number of merchant account records obtained will be around 900,000. The number of individuals linked to those accounts is expected to be approximately 90,000.

    5.3 Data quality

    The ATO expects that the data acquired will be of a high quality as it has been in previous collections. This data is fundamental to effective business operations for merchant acquirers. The ATO has also developed quality assurance processes in conjunction with the data providers to ensure the integrity of the data.

    Data will be transformed into a standardised format and validated to ensure it contains the required data elements prior to loading to ATO computer systems.

    5.4 Data integrity

    The ATO uses a sophisticated identity matching techniques to ensure we identify the correct taxpayer when we obtain data from third parties. This technique uses multiple details to obtain an identity match. For example, where an Australian Business Number (ABN), name, address and date of birth are available all items are used in the identity matching process. Very high confidence matches will occur where all fields are matched.

    Additional manual processes may be undertaken where high confidence identity matches do not occur, or a decision taken to destroy the data with no further action.

    Where administrative action is proposed, additional checks will take place to ensure the correct taxpayer has been identified. The taxpayers will be provided with the opportunity to verify the accuracy of the information before any administrative action is taken.

    5.5 Data Security

    ATO staff are subject to the strict secrecy and privacy provisions contained in Division 355 of Schedule 1 to the Taxation Administration Act 1953 and include terms of imprisonment in cases of serious contravention of these provisions.

    All ATO computer systems are strictly controlled, with features including:

    • System access controls and security groupings
    • Login identification codes and password protection
    • Full audit trails of data files and system accesses.

    The ATO will utilise its secure internet-based Data Transfer Facility to obtain the data from source agencies.

    6 Discrepancy matching

    6.1 Matching process

    The identity matching process is described above under ‘Data integrity’ and is the first step in the matching process.

    Data analysts use various models and techniques to detect potential discrepancies, such as under-reported income or over-reported deductions. Higher risk discrepancy matches will be loaded to the ATO’s case management system and allocated to compliance staff for actioning.

    Lower risk discrepancy matches will be further analysed and a decision made to take some form of compliance or educational activity, or to destroy the data.

    6.2 Quality assurance

    Quality assurance processes are integrated into ATO processes and computer systems and are applied throughout the data matching cycle.

    These assurance processes include:

    • Registering the intention to undertake a data matching program on an ATO internal central register
    • Obtaining approval from the Data Matching Gatekeeper and relevant Senior Executive Service (SES) Officers prior to any activity being undertaken
    • Conducting program pilots or obtaining sample data to ensure the data matching program will achieve its objectives prior to full data sets being obtained
    • Notifying OAIC of our intention to undertake the data matching program and request permission to vary from the Data Matching Guidelines
    • Maintaining access management logs recording details of who has access to the data, why access is required and how it will be used
    • Processes embedded into compliance activities, such as:    
      • Review of risk assessments, taxpayer profiles and case plans by senior officers prior to client contact
      • On-going reviews of cases by subject matter technical experts at key points during the life cycle of a case
      • Regular independent panel reviews of samples of case work to provide assurance of the accuracy and consistency of case work.
       

    These processes ensure data is collected and used in accordance with the ATO’s data management policies and principles, and complies with OAIC’s data matching guidelines.

    7 Previous program

    The ATO’s data matching program has been on-going since the 2008-09 financial year.

    An overall automated matching rate of over 85% is generally achieved across the credit and debit card collection. This rate will be improved through targeted manual matching.

    Previous data collections have been used by various areas of the ATO:

    • to detect unreported income through discrepancy matching
    • to identify those operating a business but failing to meet their registration, lodgment or payment obligations
    • to identify liquidated or de-registered businesses that are continuing to trade (phoenix operators)
    • to identify ‘cash only’ businesses, by exception
    • in analytical models that detect high risk activity and cases for administrative action.

    Due to the broad and diverse use of the merchant data, it is difficult to attach a dollar value to the program.

    8 Action resulting from the program

    This program will be used to identify businesses that may be under reporting or not reporting income or not complying with their lodgment obligations as part of the intent to protect honest businesses from unfair competition.

    Before administrative action is taken, either phone or written contact will be made with affected taxpayers to provide the opportunity to verify the accuracy of the information obtained by the ATO. Taxpayers will be given at least 28 days to respond before administrative action is taken.

    For example, where discrepancy matching identifies that a taxpayer is not reporting all of their income, but in fact they are reporting the income under another entity, the taxpayer will be given the opportunity to clarify the situation.

    The data may also be used to ensure that taxpayers are complying with their other taxation obligations, including registration requirements, lodgment obligations and payment responsibilities.

    In cases where taxpayers fail to comply with these obligations, after being reminded of them, escalation for prosecution action may be instigated in appropriate circumstances.

    Where a taxpayer has correctly met its obligations, the use of the data will reduce the likelihood of contact from the ATO.

    9 Time limits applying to the program

    The collection of the 2014-15 financial year data under this program protocol is expected to occur in the second half of 2015.

    The ATO is seeking to have the Privacy Commissioner exercise his discretion and allow the ATO to vary from the data destruction requirements contained in the Guidelines.

    The ATO is seeking to retain the data for five years after it is collected on the basis that its retention is required for the protection of public revenue. Current guidelines allow for a twelve month retention. Destroying the data in the timeframes contained in the Guidelines would hinder the ATO’s ability to protect public revenue because:

    • businesses identified as not meeting their taxation obligations, including being partly or wholly outside the taxation system, may have been operating that way for multiple years. A retention period of five years will enable the ATO to cross reference taxpayer records retrospectively.
    • The nature of the discrepancy matching that occurs under this program will be, in some instance, iterative. This includes the data being used to generate lodgment reviews with subsequent lodgements then being compared to the transactional data for accuracy. This process can occur over multiple years.
    • It would hinder our ability to conduct long term trend analysis in the fast evolving electronic payments market.

    The retention period sought aligns with the requirement for taxpayers to keep their business records for five years.

    A full case setting out the basis for seeking this variation to the guidelines and its impacts on individual privacy is contained at appendix B.

    10 Public notice of the program

    The ATO will publish a public notification of this data matching program in the Commonwealth government notices gazette in the week commencing 24 August 2015. A copy of the gazette notice will be provided to the data providers and the OAIC. A copy of the proposed gazette notice is included at appendix C.

    The ATO will publish a copy of this data matching program protocol on its website once the gazette notice has been published. It can be accessed from www.ato.gov.au/dmprotocols

    Data providers have been advised they may also notify their clients of participation in this data matching program, and they are considering their options.

    The ATO often uses social and proactive media to notify the public of its data matching programs. This includes Facebook posts, tweets and media releases. It is expected that some or all of these channels will be used to alert the public of this data matching program.

    11 Privacy complaints

    If a taxpayer is not satisfied with how the ATO has collected, held, used or disclosed its personal information, they can make a formal complaint.

    A complaint can be lodged by:

    • using the online complaints form at http://www.ato.gov.au/complaints
    • phoning our complaints line on 1800 199 010
    • phoning the National Relay Service on 13 36 77 (if you have a hearing, speech or communication impairment)
    • sending us a free fax on 1800 060 063, or
    • writing to:

    ATO Complaints

    PO Box 1271

    ALBURY NSW 2640

    12 Relationship to lawful functions

    The Commissioner of Taxation has responsibility for ensuring taxpayers meet their taxation obligations. Compliance with these obligations is a matter the ATO takes seriously and failure to address non-compliant behaviour has the potential to undermine community confidence in the integrity of the taxation system and the ATO’s capacity to administer the system.

    The ATO’s data matching program is one of the strategies used to identity and deal with non-compliant behaviour. Data matching programs also provide a degree of assurance that taxpayers are meeting their obligations.

    13 Legal authority

    13.1 ATO legislation

    The data will be obtained under the ATO’s 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 data providers to furnish the information requested. The ATO will use the information for taxation compliance purposes.

    13.2 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 1988 and in particular:

    • APP6.2(b) – the use of the information is permitted by an Australian Law; and
    • APP6.2(e) – the use is necessary for the ATO’s enforcement related activities.

    14 Alternative methods

    The ATO has considered a range of alternatives to this data matching program to ensure entities are complying with their taxation obligations. Relying only on data already held by the ATO is of limited value for the following reasons:

    • The ATO only receives data from taxpayers that are correctly registered and meeting their lodgment obligations
    • The ATO has no other data to cross-reference to ensure taxpayers are reporting their obligations correctly other than by directly contacting every taxpayer
    • Industry classification records are of limited value, particularly in situations where a taxpayer may conduct more than one business activity, and the industry under examination in this data matching program is not the primary business activity of the taxpayer.

    At this point in time, merchant credit and debit card data cannot be obtained from an alternative source. The ATO has considered collecting data from the individual scheme providers, however it would not contain the detail required for successful identity matching.

    This data matching program will allow the ATO to identify taxpayers who are not fully complying with their obligations, as well as those that may be operating outside the taxation system. It will also reduce the likelihood of the ATO unnecessarily contacting taxpayers who appear to be complying with their taxation obligations.

    Data matching is an effective method of examining records of thousands of taxpayers to ensure compliance with registration, lodgment, payment and reporting obligations that would otherwise be a resource intensive exercise.

    Data matching also assists the ATO in effectively promoting voluntary compliance by notifying the public of areas and activities under scrutiny.

    15 Costs & benefits

    15.1 Costs

    There are some incidental costs to the ATO in the conduct of this data matching program, but these will be more than offset by the total revenue protected:

    • Data analyst resources to match data and identify potential instances of non-compliance
    • Compliance resources to manage casework and educational activities
    • Governance resources to ensure that the Guidelines and Privacy Act are complied with, and quality assurance work to ensure the rigour of the work undertaken by analysts and compliance staff
    • Storage of the data.

    15.2 Benefits

    Benefits from conducting this data matching programs include:

    • Maintaining community confidence in both the taxation system by creating a level playing field, as well as maintaining community confidence in the ATO’s capacity to fairly administer those systems
    • Integrity of the taxation system – there are inherent risks in taxpayers not complying with their obligations, including those that deliberately abuse these systems – this program will assist the ATO in detecting, dealing with and deterring those that are not meeting their obligations
    • Enabling enforcement activity and recovery of taxation revenue – without undertaking this data matching program and subsequent compliance activity there are no assurances that a wider risk to revenue does not exist
    • Gaining a greater understanding of the businesses operating in the cash and hidden economy and being able to cater for these businesses in our compliance and educational strategies
    • Assisting the ATO to promote voluntary compliance by notifying the public of areas and activities under scrutiny.

    Appendix A - data dictionary

    Merchant record file

    Field number

    Field Name

    Format

    Description

    1

    REF_NUM

    CHAR (15)

    Unique merchant identifier

    2

    SRNM

    CHAR (30)

    The surname of the individual primary account owner

    3

    FRST_NM

    CHAR (15)

    The first name or first initial of the individual primary account owner

    4

    OTHR-GVN-NM

    CHAR (30)

    The second name or second initial of the individual primary account owner

    5

    FULL-NM

    CHAR (76)

    The merchant’s legal business name

    6

    DOB

    CHAR (8)

    Birth date of the individual primary account owner

    7

    BUS_PC

    CHAR (4)

    The post code of the business/residential address

    8

    BUS_ADDR

    CHAR (100)

    Business/residential address

    9

    RPRTD_ID_NUM

    CHAR (11)

    Merchant ACN or ABN

    10

    TRDG_NM

    CHAR (76)

    Merchant trading name

    11

    PSTL_ADDR_PC

    CHAR (4)

    Post code of the postal address

    12

    PSTL_ADDR

    CHAR (100)

    Postal address

    13

    BSB

    CHAR (6)

    Merchant’s settlement account BSB number

    14

    BNK_ACNT_NUM

    CHAR (30)

    Merchant’s settlement account number

    15

    CNTCT_NM

    CHAR (100)

    Contact name

    16

    CNTCT_PH

    CHAR (20)

    Contact phone number

    17

    MRCH_CTGY_CD

    CHAR (10)

    Merchant category code

    18

    MRCH_CTGRY_DESCN

    CHAR (100)

    Merchant category description

    19

    GRP_MRCH_ID

    CHAR (20)

    Group level merchant ID (relationship ID/parent ID)

    20

    REGN_STRT_DT

    CHAR (8)

    Merchant’s services registration commencement date or open date

    Merchant transactional file

    Field number

    Field Name

    Format

    Description

    1

    REF_NUM

    CHAR (15)

    Unique client/merchant identifier

    2

    MNTH_PERD

    CHAR (6)

    Month of period of transactions

    3

    CR_AMT

    CHAR (20)

    Gross monthly MasterCard, VISA and CUP credit card sales

    4

    CR_CNT

    CHAR (20)

    Gross monthly count of all MasterCard, VISA and CUP credit card sales

    5

    DR_AMT

    CHAR (20)

    Gross monthly debit card (EFTPOS) sales

    6

    DR_CNT

    CHAR (20)

    Gross monthly count of all debit card (EFTPOS) sales

    7

    RFND_AMT

    CHAR (20)

    Total amount of monthly refund transactions

    8

    RFND_CNT

    CHAR (20)

    Total count of monthly refund transactions

    9

    CARD_NOT_PRSNT_AMT

    CHAR (20)

    Monthly count of all sales where card was not present

    10

    CARD_NOT_PRSNT_CNT

    CHAR (20)

    Monthly count of all sales where card was not present

    11

    CSH_OUT_INCLDD

    CHAR (1)

    Cash out included indicator = N or Y

    12

    CSH_OUT _ONLY _AMT

    CHAR(20)

    Total monthly ‘cash out only’ amounts

    13

    CSH_OUT_ONLY_CNT

    CHAR (20)

    Total monthly count of ‘cash out only’ transactions

    14

    CSH_OUT_CMPNT

    CHAR (20)

    Total monthly ‘cash out component’ amounts

    Appendix B - variation to guidelines

    The Australian Taxation Office (ATO) is seeking approval for the credit and debit card data matching program to vary from one or more of the conditions detailed in Guideline 10 of the Office of the Australian Information Commissioner’s Guidelines on data matching in Australian government administration (2014) (the guidelines).

    The ATO is seeking to retain data for five years from receipt of all verified data files from data providers. The ATO considers that a variation from the usual retention periods for this data matching program is in the public interest as:

    • A retention period of five years will enable the ATO to cross reference taxpayer records retrospectively.
    • The nature of the discrepancy matching that occurs under this program will be, in some instances, iterative, occurring over multiple years.
    • It would enable the ATO to conduct long term trend analysis in the fast evolving electronic payments market.
    • Destruction of the data would inhibit the ATO’s ability to identify taxpayers who may be subject to administrative action and therefore result in loss of public revenue.

    The ATO has determined that this variation will not affect the privacy of an individual.

    The retention period sought aligns with the requirement for taxpayers to keep their business records for five years.

    Additional information justifying this variation is included in the tables below:

    • Table 1 – Matters considered in accordance with guideline 10.2 in seeking this variation
    • Table 2 – Consistency with requirements of the other guidelines issued by the Office of the Australian Information Commissioner

    The ATO does not require that this request be kept confidential (guideline 10.6) and has no concern should the Office of the Australian Information Commissioner place this information on its website.

    Table 1: Matters considered in seeking this variation to the Guidelines

    Matter Considered

    Consideration

    10.2.1 - The effect of not abiding by the specified requirements of the Guidelines would have on individual privacy

    • Retaining data for a period of five years will not increase the risks to an individual’s privacy. The ATO has in place very secure processes for handling and storing data. Once acquired, all data will be stored on ATO secure computer systems where access is strictly controlled and full audit logs maintained
    • The ATO and its staff operate under stringent secrecy and privacy legislation that prohibits the improper access to or disclosure of protected information. These obligations are supported by significant penalties, including imprisonment. This substantially mitigates the risks of breaches of privacy.

     

    10.2.2 - The seriousness of the administrative or enforcement action that may flow from the data matching program

    • An extension of the retention period will not affect the seriousness of the administrative action that may flow from the match, but will assist in detecting non-compliance or taxation fraud
    • Where the ATO proposes to take administrative action where a taxpayer may have reported incorrectly, the ATO will differentiate between those that try to do the right thing and those that set out to deliberately avoid their obligations. Documented procedures, including the Taxpayers’ Charter and Compliance Model will be followed to ensure fairness and consistency.

     

    10.2.3 - The effect that not abiding by the specified requirements of the Guidelines would have on the fairness of the program – including its effect on people’s ability to find out the basis for decisions that affect them and their ability to dispute those decisions

    • There will be no effect on the fairness of the program or the ability of taxpayers to find out the basis of decisions that impact them or their ability to dispute those decisions
    • Before any administrative action is undertaken, taxpayers will be given at least 28 days to verify the accuracy of the information that has been derived from this data matching program
    • Where administrative action is to be undertaken, we will adhere to the principles established in the Taxpayers’ Charter and Compliance Model to ensure an equitable and consistent approach is taken
    • If a taxpayer does not agree with an assessment, they maintain the right to dispute the decision. They also have the legal right to appeal against those decisions through the courts and tribunals.

     

    10.2.4 - The effect that not abiding by the specified requirements of the Guidelines would have on the transparency and accountability of government operations

    • There will be no adverse effects on the transparency and accountability of government operations
    • A program protocol is submitted to the Office of the Australian Information Commissioner and the ATO will strictly adhere to the commitments in that document
    • The ATO will publish a notice with general information about the program in the Commonwealth Government Notices Gazette before data matching commences. The ATO will also make a copy of the program protocol available on its website.

     

    10.2.5 - The effect that not abiding by the specified requirements of the Guidelines would have on compliance of the proposed program with the Australian Privacy Principles in the Privacy Act 1988

    • There will be no effect on compliance with the Australian Privacy Principles contained in Schedule 1 to the Privacy Act 1988 due to longer retention of the data. The data is collected is solely for the stated objectives established in the data matching program protocol.

     

    10.2.6 - The effect that abiding by all of the requirements of the Guidelines would have on the effectiveness of the proposed program

    • The effectiveness of the program would be reduced if the data retention period is not extended
    • There would be a significant reduction in the ability of the ATO to detect incorrect reporting and taxation fraud without understanding and monitoring trends in the data collected
    • The destruction of the data in accordance with the current Guidelines would impact the integrity of the taxation system by:    
      • Limiting the ATO’s ability to identify taxpayers who may be subject to administrative action
      • Resulting in the loss of revenue
       

     

    10.2.7 - Whether complying fully with the Guidelines could jeopardise or endanger the life or physical safety of information providers or could compromise the source of information provided in confidence

    • Not abiding by all the requirements of the Guidelines would not influence or affect the personal safety of any individual identified as part of the program or compromise the source of the information provided in confidence.

     

    10.2.8 - The effect that abiding by all the requirements of the Guidelines would have on public revenue – including tax revenue, personal benefit payments, debts to the Commonwealth and fraud against the Commonwealth

    • Not allowing the variation to the data retention period of the current program would cause the ATO to miss potential breaches of taxation laws and subsequent non-payment of tax. This would result in the Commonwealth foregoing taxation revenue
    • There are risks to the integrity of taxation system when people fail to comply with their obligations. Abiding by all of the requirements of the Guidelines will reduce the effectiveness of proposed compliance activity. The ATO would miss the opportunity to educate those taxpayers trying to do the right thing, and deterring those that are non-compliant from repeating the behaviour
    • The effect of abiding by all of the requirements in the Guidelines could negatively impact on both public revenue and public and government confidence in the ATO. People not complying with their taxation obligations, including those operating outside the system, set a bad example to compliant taxpayers and may encourage their non-compliance. Maintaining community and government confidence in the taxation system is critical to the on-going role of the ATO.

     

    10.2.9 - Whether abiding by all of the requirements of the Guidelines would involve the release of a document that would be an exempt document under the Freedom of Information Act 1982

    • Only information relating to the taxpayer’s own affairs will be released upon receipt of a Freedom of Information request.

     

    10.2.10 - The legal authority for conducting the proposed program in a way inconsistent with the specified requirements of the Guidelines

    • There is no specific legislative power authorising the conduct of this program in a way inconsistent with the Guidelines
    • The Commissioner of Taxation, or his authorised representative, has formed the opinion that this data is required to enable the ATO to effectively and efficiently carry out its legislated functions under the general powers of administration contained in:    
      • Section 3A of the Taxation Administration Act 1953
      • Section 8 of the Income Tax Assessment Act 1936
      • Section 1-7 of the Income Tax Assessment Act 1997
       
    • The reasons for proposing to operate outside requirements of the Guidelines are detailed above.

     

    Table 2: Matters considered in seeking this variation to the guidelines

    This section outlines where the ATO is consistent with the requirements of the Office of the Australian Information Commissioner’s Guidelines on data matching in Australian government administration (2014).

    Paragraph/Guideline

    Action Taken/To Be Taken

    Paragraph 6

    Status of the Guidelines

    • The ATO has committed to complying with the Office of the Australian Information Commissioner’s Guidelines on data matching in Australian government administration (2014) by way of a Chief Executive instruction.

     

    Guideline 1

    Application of the Guide

    • The ATO applies the Guidelines for all data matching programs where it is anticipated the program will include records of 5,000 or more individuals.
    • The ATO recognises that programs where there are multiple data sources but with common objectives and algorithms are treated as a single data matching program.

     

    Guideline 2

    Considerations before conducting a data matching program

    • The ATO conducts a cost-benefit analysis and considers alternate methods prior to proposing to conduct a data matching program.
    • Further, the ATO has rigorous governance arrangements, processes and system controls in place to protect the privacy of individuals.

     

    Guideline 3

    Prepare a program protocol

    • Prior to conducting a data matching program, the ATO prepares a data matching program protocol, submits this to the Office of the Australian Information Commissioner and makes a copy publicly available on the ATO website
    • When elements of a data matching program change, the protocol is amended and a copy of the amended protocol is provided to the OAIC and updated on the ATO website

     

    Guideline 4

    Technical Standards Report

    • Documentation is prepared and maintained so as to satisfy the requirements of a Technical Standards Report.

     

    Guideline 5

    Notify the Public

    • The ATO publishes notification of its intention to undertake data matching program in the Commonwealth Government Gazette Notices prior to the commencement of the program.
    • This notice will include the following information as required by the Guidelines:    
      • a brief description of the objectives of the data matching program
      • list the matching agency and source entities involved in the data matching program
      • contain a description of the data contained in the data sets involved in the data matching program
      • list the categories of individuals about whom personal information is to be matched
      • include the approximate number of individuals affected
      • reference to the ATO’s privacy policy
       
    • Notification of the program is also published on the ATO’s website and data providers are advised they can advertise their participation in the data matching program.

     

    Guideline 6

    Notify individuals of proposed administrative action

    • Prior to taking any administrative as a result of the data matching programs individuals and other entities are given at least 28 days to verify the accuracy of the information provided to the ATO by third parties.

     

    Guideline 7

    Destroy information that is no longer required

    • The ATO is seeking to vary from this requirement.

     

    Guideline 8

    Do not create new registers, datasets or databases

    • The ATO does not create new registers or databases using data obtained in the course of a data matching program.

     

    Guideline 9

    Data Matching Program Evaluations

    • Programs are evaluated within 3 years of the commencement of the data matching program. These evaluations are provided to the Office of the Australian Information Commissioner.

     

    Guideline 10

    Variations to Guideline Requirements

    • When the ATO intends to vary from the requirements of the Guidelines it seeks the approval of the Office of the Australian Information Commissioner and provides documentation to support the variance.

     

    Guideline 11

    Data Matching with entities other than agencies

    • The ATO undertakes its own data matching programs.
    • The ATO does not outsource this function.
    • Where data is obtained from an entity other than an individual, the ATO usually does so using its formal information gathering powers. In these instances the entities are advised they are able to notify their clients of their participation in the data matching program.

     

    Guideline 12

    Data matching with exempt agencies

    • The ATO does not usually undertake data matching with agencies that are exempt from the operations of the Privacy Act 1988 under section 7 of that Act and that are subject to the operation of the Guidelines (i.e. any data matching undertaken with an exempt agency would usually be for fewer than 5,000 individuals).
    • In the event a data matching activity would otherwise be subject to these Guidelines except for the exemption status, the ATO would still adhere to the principles of the Guidelines and prepare a program protocol, seeking to vary from the Guidelines by not publishing a public notice or the protocol document. The ATO would still lodge a copy of the Protocol with the Office of the Australian Information Commissioner.

     

    Guideline 13

    Enable review by the Office of the Australian Information Commissioner

    • The ATO would not prevent the Office of the Australian Information Commissioner from reviewing its data matching activities and processes. These activities and processes have been reviewed by the Australian National Audit Office and Inspector-General of Taxation.

     

    Appendix C - gazette notice

    Commissioner of Taxation

    NOTICE OF A DATA MATCHING PROGRAM

    The Australian Taxation Office (ATO) will request and collect data relating to credit and debit card payments to merchants for the periods from 1 July 2014 to 30 June 2015 from the following financial institutions:

    • American Express Australia Limited
    • Australia and New Zealand Banking Group Limited
    • Bank of Queensland Limited
    • Bendigo and Adelaide Bank Limited
    • BWA Merchant Services Pty Ltd
    • Commonwealth Bank of Australia
    • Diners Club Australia
    • National Australia Bank Limited
    • St George Bank
    • Suncorp-Metway Limited
    • Tyro Payments Limited
    • Westpac Banking Corporation

    This acquired data will be electronically matched with certain sections of ATO data holdings to identify possible non-compliance with taxation law.

    Records relating to approximately 900,000 merchant accounts are expected to be received. The number of affected individuals linked to those accounts is expected to be approximately 90,000.

    The purpose of this data matching program is to ensure that taxpayers are correctly meeting their taxation obligations in relation to their business income. These obligations include registration, lodgment, reporting and payment responsibilities.

    A document describing this program has been prepared in consultation with the Office of the Australian Information Commissioner. A copy of this document is available:

    The ATO complies with the Office of the Australian Information Commissioner’s Guidelines on data matching in Australian government administration (2014) which includes standards for data matching to protect the privacy of individuals. A full copy of the ATO’s privacy policy can be accessed at www.ato.gov.au/privacy

      Last modified: 13 Apr 2016QC 46786