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The expanded capabilities will now include information from property managers, landlord insurance and sharing economy providers.
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ATO widens its data-matching capacity
14 June 2023
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The ATO is expanding its data-matching capability to ensure taxpayers accurately report their income and deductions this tax time.
The Tax Office said the increased data matching system will provide access to information from property managers, landlord insurance providers, financial institutions providing loans for residential investment properties, sharing economy providers and income protection policy information.
ATO assistant commissioner Tim Loh said the expanded capabilities will leave the Tax Office clear on which individuals are being genuine and which are trying to get away with providing fallacious data.
“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,” said Mr Loh.
“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.”
The ATO said while nine in 10 rental property owners were getting their returns wrong, the additional data matching capability of investment loan data and landlord insurance policy information should see a marked improvement.
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“Around 80 per cent of taxpayers with rental income claimed a deduction for interest on their loan, and this is where we’re seeing mistakes,” said Mr Loh.
“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 Tax Office has also reminded taxpayers they can claim insurance premiums paid for rental properties, but any insurance payouts received concerning an investment property must be reported as income.
The ATO said taxpayers need to be honest with their tax agents so they could prepare their returns accurately, with 87 per cent of individuals who own rental properties using tax agents to lodge their returns.
The Tax Office also revealed the Sharing Economy Reporting Regime (SERR) was commencing from 1 July 2023 and would require more electronic distribution platforms to report payment information to the ATO.
A record number of taxpayers now were working multiple jobs or supplementing their income through side hustles or share economy activities which caused the need for the SERR, said the ATO.
It said the program would come into effect across two phases:
- Electronic distribution platforms that provide taxi services, ride-sourcing, and short-term accommodation must report income data from 1 July 2023.
- All other electronic distribution platforms must report that 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,” said Mr Loh.
“These new rules will give the ATO clear visibility of people who are earning income using these platforms.”
The Tax Office said the greater data-matching capabilities extended to income protection insurance, with it being able to know premiums paid for income protection insurance policies as well as payouts received.
“You can generally claim a deduction for income protection insurance you buy but remember you can’t claim the deduction if the insurance policy is paid by your super fund,” said Mr Loh.
“If you receive an income protection insurance payout from either your personal insurance policy or from your super fund policy, you must include the income in your tax return.”
Mr Loh said the ATO was there to ensure Australians were doing the right thing come tax time so individuals could be confident they were on a level playing field.
“We are here to help people get their tax return right the first time, but our message is clear – we’re not playing Guess Who with tax returns this year.”
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