Is Your Business At Risk?
The ATO’s new Data Matching Programs are likely to match over 500 million business transactions this financial year! Data-matching means comparing the same information from two different sources and this process has expanded rapidly in recent years.
While many small business owners may be aware of the Tax Office’s data-matching activities, technology is changing the landscape of the ATO’s compliance capabilities.
The new computer system the ATO has invested in can reveal irregularities and unusual transactions very easily.
Consequently, the Tax Office has extended its reach, and plans to monitor businesses in the building industry as well as coffee suppliers, contractor payments, credit/debit sales, offshore bank accounts and social security payments. They are now able to access a lot of data about your affairs, and match tax records against third-party data received from banks, share registries, other government agencies such as Centrelink, and the Australian Securities and Investments Commission.
The ATO has announced it will also be specifically targeting online selling sites that have made substantial sales and they have also started a pilot program comparing Centrelink records against people who seem to be running a successful online business using eBay.
They’re going to be checking records to spot non-compliance with lodgement, payment and correct reporting obligations under taxation law which includes undeclared income and GST obligations. If discrepancies are discovered, the ATO say they will take follow-up action.
So keeping up to date with your accounting records is important to make sure you don’t miss anything. And that applies to your expenses as well as to your income.
Employers are targeted too.
The ATO plans to collect names and addresses from state and territory WorkCover and WorkSafe sources for the 2011 to 2013 financial years.
The details furnished by WorkCover and WorkSafe will be compared to tax records to identify employers who are not complying with their registration, lodgement and payment obligations under taxation law. There could also be some referrals back to the state and territory authorities since the ATO stated it may also disclose specifics of employers that may not be meeting their workers’ compensation obligations.
So, the ATO’s sophisticated and escalating data matching capabilities makes the message pretty clear. If you are not paying the correct amount of tax, there is a high chance you’re going to be caught. And it’s not going to stop there. The new ATO Standard Business Reporting is also designed to make it easier for government departments and agencies to exchange data.
Here is some more information on data matching from the ATO