ATO ups data-matching in time for tax time

Yasmine Raso

Senior Journalist, Financial Newswire

14 June 2023

The Australian Taxation Office (ATO) announced it has extended its data-matching capabilities across other forms of income in time for tax time, enabling incorrect information on tax returns to be traced and recorded.

Data can be collected across property managers, landlord insurance providers, financial institutions providing loans for residential investments properties, sharing economy providers like AirBnB and income protection policy information.

“This isn’t a game of Guess Who, as our sophisticated data-matching programs provide us with all the clues we need to track down taxpayers with incorrect information in their tax return,” ATO Assistant Commissioner, Tim Loh, said.

“We will use this information to identify and educate taxpayers who have made incorrect claims in their return, with a longer-term plan to pre-fill as much information as possible in future years.”

This comes after the ATO found 90 per cent of rental property owners were incorrectly completing their return. It also reminded taxpayers that insurance premiums paid for rental properties can be claimed as a tax deduction and any insurance payouts for an investment property must be reported as income.

“Around 80% of taxpayers with rental income claimed a deduction for interest on their loan, and this is where we’re seeing mistakes,” Loh said.

“For example, you can’t refinance an investment property to buy personal items, like a holiday to Europe or a Tesla, then continue to claim the interest expenses as a tax deduction. This new data provides us with crucial intelligence to paint a picture of what’s true and accurate in tax returns.”

The government body also revealed the launch of the Sharing Economy Reporting Regime (SERR) which will come into effect from 1 July 2023, to ensure taxpayers also include information from secondary jobs or ‘side hustles’ on their tax returns. The first phase from this year implores electronic distribution platforms that provide taxi services, ride-sourcing, and short-term accommodation to report income data; all other platforms must do so from 1 July 2024.

“While the ATO has received data from a number of digital platforms in the past, this legislative change means more platforms will be required to regularly report into the future,” Loh said.

“These new rules will give the ATO clear visibility of people who are earning income using these platforms.”

The data-matching capability for income protection premiums paid and payouts received was also published this month, as Loh reminded taxpayers that they cannot claim premiums as a deduction if paid by a super fund and payouts must be recorded as income on tax returns.