Tax in 2013 is certain to be as lively as ever, probably even more so with a federal election by October.  Get ready for the promises.

The ATO has been well funded to gather a wide range of information it can then trawl through to evaluate compliance with the tax laws.  Do not underestimate the sheer volume of data obtained by the ATO and the ever-increasing sophistication of analysis techniques.  One estimate for 2011 gave the raw volume as matching of 780 million transactions.

2013 Program

The ATO has just announced data-matching programs for offshore bank accounts, overseas transactions and transfers, credit and debit card sales, eBay transactions, real property and vehicle transactions, rental properties, interest earned, and dividends and trust distributions.

The program is designed to enable the ATO to address compliance behaviour, including lodgment of BAS and tax returns, disclosure of sales by merchants, capital gains, and whether GST has been correctly collected.  (One target is the records of 900,000 merchants).

Sources of Information

Property information is sourced from State Revenue, residential tenancy authorities, councils, and agent listings.

Offshore Accounts & Transactions

Around 50,000 taxpayers with offshore bank accounts are likely to be asked to complete a survey for the years 2008 to 2011, including the details of the account, sources of income, where it has been disclosed in Australia, connecting entities and associations, interest earned on the accounts, etc.  We replied to one ATO 'request' in December, the client transferred money from HK to Australia, the banks used an intermediary bank for transfers, and the ATO now insists the client 'must have' an account with the transfer intermediate.  This is a gross lack of understanding but unfortunately that is the process the ATO has put in place, and to invite a full audit is costly and a huge waste of time.

Be Ready to Reply

Data-matching is well and truly here to stay, and it is likely to be ramped up (the ATO received $340million last year and expects to collect $2billion from its program).  Keep good records, disclose even one-off transactions, get advice up-front on GST, capital gains and overseas matters, and expect more scrutiny.