Tax Technology - Data Analytics in Australia

; posted on
August 21st, 2018

The data-driven government

In 2016, the Australian Taxation Office (ATO), moved from the electronic lodgement service (ELS) of client tax returns and other tax forms to a new platform: standard business reporting (SBR).

SBR extracts information recorded in the business and accounting software and prefills the information into the relevant government report. The report can be checked for accuracy and can be submitted directly and securely to government agencies.

SBR is intended to decrease the documentation preparation time. The platform also minimized the need for people and businesses to interact with multiple government agencies as those agencies have access to data provided to the ATO.

ATO data mining and data matching program

Data analytics is widely used by tax authorities across the globe in order to target tax evaders. Just like most countries, Australia took advantage of technology to improve tax compliance in the country.

The ATO uses data analytics to identify taxpayers with undisclosed income and assets. ATO obtains data from various sources such as data reported by employers, bank and other financial institutions, health insurance funds, Business Activity Statements, Superannuation accounts, share registries, credit card operators, online sellers and many more. The ATO validates the gathered data and develops profiles of the individuals. The data is then compared against the information provided in the taxpayers return. If there is a discrepancy, the ATO may escalate the tax return for further investigation.

The ATO also has a group of data experts who are hi-tech private investigators. These data experts are highly qualified personnel with doctorates in data mining and machine learning. They are responsible for developing the data set that identifies non-compliers. Particularly, they analyze data from an individual’s social media platform to find out if the declared income matches the lifestyle of the individual in question.

Given this sophistication inside ATO, it is truly important to take extra care in preparing tax and TP documentation in order to avoid discrepancies.

Data privacy

ATO explicitly stated that they comply with laws to protect each citizen’s privacy when collecting data from other agencies and organizations for ATO’s data matching programs.  These laws include the Privacy Act 1988, the secrecy provisions of the Income Tax Assessment Act 1936, the Taxation Administration Act 1953 and other tax laws. ATO also adheres to the Privacy Commissioner’s Guidelines on Data Matching in Australian Government Administration by preparing and publishing a protocol for each of ATO’s data matching programs.

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