Tax refunds targeted as ATO data matching intensifies

The ATO’s data matching technology is expanding, catching out people trying to dodge tax as their deductions elsewhere drop.

Does the Australian Taxation Office know what you had for breakfast? Not quite, but as tax time heads towards its second half, Australians are being reminded that its data collection skills are growing dramatically.

And, as people struggle with smaller refunds or surprise tax bills this year following the end of a key tax offset and reduced working from home hours, they are being urged to double-check their deductions.

For the first time this year, the ATO has started digging into bank loan data of property investors after it found may investors’ tax returns contained mistakes such as under-reporting rental income and incorrectly apportioning interest costs.

Platinum Accounting managing director Coco Hou said a lot of people believed their personal information was untouchable, but “the ATO has broad powers to access a lot of data from a range of different sources”.

Tax agent Coco Hou says data matching is a powerful tool. Picture: Toby Zerna

“Many people might not fully realise the extent of data collection,” she said. This included:

• Payments from employers, contactors, suppliers and financial institutions in Australia and overseas.

• Share dividend details from share registries.

• Information from superannuation funds and cryptocurrency exchanges.

• Date from other government agencies including state and territory revenue offices.

“The law allows the ATO to collect this information from other people and entities without you even knowing that this information is being shared,” Ms Hou said.

“Data matching is a powerful tool that helps the ATO to find issues and escalate them quickly.”

The ATO has more than 25 different data matching protocols in place collecting names, addresses, dates of birth and transaction data from organisations including motor vehicle registries, rental property managers, insurance companies, online selling platforms, ride-sharing platforms and motoring associations.

ATO assistant commissioner Tim Loh said the ATO’s data scientists were currently assessing the new residential investment property loan data.

Information about data matching programs was available on the ato.gov.au website, he said.

“People are responsible for the information in their return even if they use a registered tax agent. Tax agents also need to make sure they are asking enough questions to ascertain their client’s state of affairs.

“We encourage taxpayers to consider whether their claims reflect their working arrangements this year, given that for many people their working arrangements would have changed last financial year,” he said.

ATO assistant commissioner Tim Loh says people with a tax bill should not panic. Picture: Supplied

So far this tax season, the ATO has received more than 5.2 million tax returns and handed out 3.7 million refunds, fewer than last year.

Mr Loh said the ATO had seen a lot of questions from people about lower-than-expected refunds or tax bills this year, and encouraged people to visit ato.gov.au/mytaxresult for an overview.

The end of the Low and Middle Income Tax Offset in 2021-22 has slashed millions of Australians’ tax refunds by up to $1500.

“If you’ve received a bill, don’t panic,” Mr Loh said. “If you can’t pay your tax bill in full, the best thing to do is get in touch.”

Payment plan arrangements were available for people experiencing financial difficulties, Mr Loh said.

“The due date for payment when you lodge your own tax return is 21 November, even when you lodge today,” he said.

“This may be later if you are on the books with your registered tax agent before 31 October.”

Originally published as Tax refunds targeted as ATO data matching intensifies