ATO Data Matching: What Taxpayers Should Know

The Australian Taxation Office (ATO) is drawing media attention this tax season with its scrutiny of various areas, including the usual remote work expenses, as well as cryptocurrencies and rental properties. However, beyond the media spotlight the ATO has also quietly developed new data connections that could indicate future audit targets. Scott Hogan-Smith from ECOVIS Clark Jacobs explores these data links and the information being gathered about taxpayers.

Recurring Focus Areas

The ATO is requesting records from designated service providers of cryptocurrency transactions occurring between 2014 and 2020. If you hold crypto assets, the ATO is gradually catching up with data from previous years.

As usual, data matching will also take place with the gig economy, which includes platforms like Airbnb and Uber, as well as rental property data.

These are the typical targets for ATO data matching, conducted to ensure that all income is reported. However, some new and interesting connections have been established.

New Areas of Focus

One of the new data links for the 2024 year is with Services Australia, where the ATO is seeking to match income data from Services Australia with the primary focus on ensuring that Medicare Levy Surcharge and Exemptions are being properly reported. However, this will likely lead to other compliance activities.

An interesting new connection is that between the ATO and the State Government-administered Rental Bond Boards and the recently announced Rental Property Software connection. This will enable the ATO to much more accurately identify when rental bonds are taken and released, along with being able to receive direct information about rental income and expenses being tracked through management software. This, in turn, will make it much easier for the ATO to data match income and expenses on tax returns and to review and audit potential mis-application of capital gains tax discounts if a property is sold.

Another new data connection to note is between the ATO and providers of novated car leases. While the ATO has maintained a close relationship with state vehicle registration bodies in recent years, the new focus on novated leasing providers and vehicles registered in business names indicates the ATO’s increased attention on Fringe Benefits Tax (FBT) and its aim to reduce the amount of unpaid FBT.

Key Points to Remember

As you get ready to file your taxes for 2024, keep in mind that the ATO will probably have extensive records of your income and its origins. To maximize your deductions, ensure you maintain thorough and accurate documentation to back up your claims. This will afford you a more favourable position should your tax return be selected for an ATO audit or review.