SmartCompany has reported that from 1 July 2014, the ATO will significantly expand its data matching program to obtain additional information that is not currently available to it. The 2014–15 financial year will be the first year in which the ATO receives broader transaction data, enabling it to cross-check taxpayer information more thoroughly than ever before.
This change represents a major shift toward automated compliance, with the ATO receiving third-party data in near real time.
What this means for taxpayers
The implications for taxpayers are straightforward. The ATO will already hold detailed information about certain transactions before a tax return or activity statement is lodged. Discrepancies between reported figures and third-party data are likely to trigger a review or audit. This places increased importance on accurate reporting and strong record keeping.
What this means for businesses
The expansion of data matching will increase compliance obligations for businesses required to report the additional information. This may lead to:
• increased administrative work
• higher training costs
• the need for updated systems to collect and report correct data
These obligations follow shortly after the introduction of the contractor payment reporting system for the building and construction industry in 2012–13, which required many businesses to lodge annual reports for the first time.
New and expanded reporting categories
Real property transactions
Real estate agents, conveyancers and solicitors may be required to report expanded information regarding both vendors and purchasers. Data may include:
• names, addresses, dates of birth
• tax file numbers, ABNs or ACNs
• property identifiers and address details
• contract and settlement dates
• purchase price and other consideration
The reporting process will need to address privacy concerns, particularly as contract parties should not have access to each other’s personal information. How this will be implemented securely remains to be seen.
Transactions of shares and units
For listed shares, the ATO already receives information on sales when a shareholder provides their tax file number. Under the expanded regime, new reporting may include:
• acquisition and sale dates
• number of shares or units
• purchase and sale prices
• brokerage fees
• capital returns and payment dates
Private companies and unit trusts may also be required to report similar data for transfers of shares or units.
Merchant debit and credit transactions
The ATO previously obtained large datasets from financial institutions for credit and debit card transactions from 1 July 2012 to 30 June 2014. These were used to match sales declared in BASs and tax returns.
Due to the rapid growth of e-commerce and overseas digital sellers, the ATO may now require businesses with merchant facilities to report these transactions directly. This shifts the reporting burden from banks to businesses and may also capture foreign online operators selling into Australia.
Such data will support enforcement of GST and income tax obligations for digital sellers who previously operated outside the ATO’s visibility.
Taxable government grants
Government agencies may be required to report:
• ABNs
• tax file numbers
• names and addresses
• dates of birth
• grant amounts
Most of this information is already collected, so the additional burden is likely to fall more on government agencies than recipients. However, taxpayers should expect increased scrutiny of taxable grants.
Broader implications
With increasing access to real-time reporting across multiple sectors, Australia is moving closer to pre-populated tax returns or potentially no individual tax returns for some taxpayers in the long term.
Businesses will need to ensure:
• staff receive adequate training
• systems are updated to manage new reporting fields
• privacy obligations are properly addressed
Taxpayers must also keep high-quality records, as incorrect information reported by third parties may result in an ATO review or audit. In such cases, the taxpayer will still need to justify the tax treatment even if the error originated from another organisation.
Submissions open
Treasury is accepting submissions from small and medium enterprises regarding concerns or comments on the expanded data matching regime. Submissions are due by 11 March 2014.
If you require assistance understanding how these changes affect your business or need support with compliance processes, Bramelle Partners can help.
If you have any questions please contact our accountants in North Sydneyon 02 9216 7640 or speak to your accountant, business or tax advisor.
Frequently Asked Questions
Will this increase compliance costs for businesses?
Yes. Businesses required to report these additional details may face new administrative costs, staff training expenses and potential consulting fees to ensure reports are completed correctly.
What additional information might be required for property transactions?
Real estate agents or conveyancers may need to report further details such as names, addresses, dates of birth, TFNs, ABNs, ACNs, property identifiers, contract dates, settlement dates and sale prices. Privacy protection will be a key issue.
Will overseas online retailers be affected?
Potentially, yes. With improved data, the ATO may be able to enforce tax or GST obligations on overseas e commerce operators making sales to Australian customers.
