The Australian Taxation Office (ATO) is stepping up its data-matching capabilities to promote tax fairness and accuracy. By expanding its reach and gathering information from various sources, the ATO aims to prevent taxpayers from omitting income or exaggerating deductions during tax season. These measures are part of the ATO’s commitment to maintaining a level playing field and protecting taxpayers who fulfill their tax obligations.

Data Sources and Sophisticated Programs

To achieve its objectives, the ATO has broadened its data-matching network. It now receives data from property managers, landlord insurance providers, financial institutions involved in residential investment property loans, sharing economy platforms, and income protection policy providers. Leveraging sophisticated data-matching programs, the ATO can effectively track down taxpayers who provide incorrect information in their tax returns.

Identifying and Educating Taxpayers

Assistant Commissioner Tim Loh emphasizes that the ATO’s data-matching initiatives are not a game of chance. The information collected enables the ATO to identify taxpayers with erroneous claims and educate them about their mistakes. In the long run, the ATO plans to pre-fill more information in future tax returns, simplifying the process for taxpayers while ensuring accuracy.

Focus on Rental Property Owners

An analysis of income tax returns reveals that a significant number of rental property owners make errors in their filings. In response, the ATO has introduced two new data-matching protocols for rental investors. These protocols cover investment loan data and landlord insurance policy information. Many taxpayers mistakenly claim deductions for loan interest that was used for personal expenses unrelated to their investment properties. The ATO reminds taxpayers that insurance premiums paid for rental properties are tax-deductible, while insurance payouts related to investment properties must be reported as income.

Responsibility and Tax Agent Involvement

Approximately 87% of rental property owners utilise the services of registered tax agents to lodge their returns. It is crucial for taxpayers to provide their agents with accurate and complete information to ensure correct return preparation. Ultimately, taxpayers are responsible for the content of their tax returns, even when they rely on tax agents.

Sharing Economy Reporting Regime (SERR)

As more individuals engage in side hustles and sharing economy activities, the ATO is implementing the Sharing Economy Reporting Regime (SERR). Starting from July 1, 2023, electronic distribution platforms facilitating taxi services, ride-sourcing, and short-term accommodation will be required to report income data to the ATO. This reporting requirement will be implemented in two phases, with other electronic distribution platforms mandated to report from July 1, 2024. The SERR enhances transparency and ensures accurate reporting of income earned through these platforms.

Income Protection Insurance

The ATO has also introduced a new data-matching protocol for income protection insurance. By accessing information about premiums paid and payouts received, the ATO aims to accurately assess taxpayers’ income. Generally, taxpayers can claim deductions for income protection insurance premiums unless the policy is paid by a super fund. Any income protection insurance payouts, regardless of whether they originate from personal policies or super fund policies, must be included in tax returns.

Fairness and Compliance

The ATO’s overarching goal is to establish a level playing field and protect taxpayers who dutifully comply with tax regulations. While the ATO aims to assist taxpayers in submitting accurate tax returns, it is imperative to note that they will not tolerate incorrect information or tax evasion attempts.

For further information and detailed insights into the data-matching protocols and the Sharing Economy Reporting Regime, please visit the ATO website.