ATO Data Matching & Setting Sights on Airbnb
The Australian Taxation Office (ATO) has partnered with a range of external sources to create a series of data matching protocols that help to ensure people and businesses comply with their tax and superannuation obligations.
Data matching involves the collection of data from various sources such as banks, employers, health funds, superannuation funds etc. and matching it against the information provided in individual and business income tax returns.
The list of sources from which the ATO compare information is constantly growing and has recently been expanded to include details of real property transactions sourced from offices including the state revenue offices, rental bond authorities and the land titles offices.
The ATO have obtained data regarding real property transactions from the period 20 September 1985 (which coincides with the introduction of the capital gains tax) to date. The ATO expects to match millions of records from these authorities with its records from over 11 million individuals.
The purpose of this program is to ensure taxpayers are correctly meeting their tax and other obligations in relation to their real property dealings. As well as income tax, the ATO will be matching obligations such as registrations, lodgement, reporting and capital gains tax.
The ATO have also announced they will be targeting income received from properties rented out using Airbnb to ensure people are disclosing their rental income. The ATO has access to numerous sources of third-party data, including the Airbnb site itself, and it will use these resources to match income declared as well as to check on falsely claimed deductions.
The ATO will also use this data to ensure that if a property has been used to generate income, the eventual sale of that property will be met with capital gains tax.
The ATO will use the data matching results to identify risks and trends in non-compliance, identify appropriate compliance activities and to promote voluntary compliance by publicising the outcomes of the data matching program.
What does this mean for taxpayers? It will become increasingly difficult for taxpayers to omit income generating transactions from their income tax return and it will assist the ATO in their goal of ensuring all taxpayers are assessed correctly and fairly.
Despite the Australian taxation system being a system of self reporting, the ATO is constantly updating its technology and information sharing protocols which enables them to pre-fill a number of the items in all income tax returns. If a return is lodged omitting income which the ATO expects to be included in the return, the ATO will issue a letter informing the taxpayer that the return will be assessed including the additional income unless the taxpayer can produce proof that the information provided by the external source to the ATO is incorrect.
If you receive such a letter from the ATO, contact your tax professional for assistance.
For a full list of current data matching protocols, see the ATO website here.
Source: Written by Tess Uncle, Associate Director of Wybenga & Partners Pty Limited, Chartered Accountants, Sydney