ATO DATA MATCHING

The ATO uses data matching to determine whether or not an audit is required.  Data matching compares data from different sources against lodged tax returns.  If there is a discrepancy, the ATO may escalate the tax return for further investigation.

For individual taxpayers, the ATO matches data with financial institutions, share registries, data reported by employers, and distributions from managed funds and trusts.

With regards to rental properties, the ATO matches data with banks, rental bonds boards, and revenue offices.

When determining whether to audit a business, the ATO can compare data to a larger variety of sources.  For example, is the disposal of a motor vehicle reported by the RTA reflected in the tax return?

If the tax return data does not match the data reported from other organisations, you could be selected for an audit.

In many cases there is a valid reason for the apparent discrepancy, but I recommend that you treat a ‘please explain’ letter with care, and seek advice from your accountant before responding.

ALSO ON THIS TOPIC

Land Tax on Canberra Property

LAND TAX ON CANBERRA PROPERTY All states and territories impose quarterly land tax on residential rental properties except the Northern Territory. In the ACT, there is no land tax exempt lower threshold, meaning that you pay land tax from the first dollar of land...

What is Negative Gearing?

WHAT IS NEGATIVE GEARING? Negative gearing is the claiming of the loss from a rental property against your other income. The result is that you pay tax on a lower taxable income. Let’s break it down. Your income is $100k. You have rental income of $20k, and rental...

Asset Definintion

ASSET DEFINITION When is an expense not an expense? When it is an asset. The accounting definition of an asset is an item that has a life of more than 12 months. The ATO has reams of tables concerning the effective life of assets. This then dictates the depreciation...

Property Seminar Deductions

PROPERTY SEMINAR DEDUCTIONS The ATO is becoming increasingly concerned about the rise in claims associated with attending property seminars. Property seminar costs are only deductible if they are concerned with how to manage your EXISTING rental properties. For...