The ATO power of data matching

[pickle pickle]

The ATO data matching abilities scares me as an accountant. However often the people working in the ATO aren't that smart.

2 examples ccome to mind on the above point. We had a client that reported CGT, however only reported the net CGT rather than preparing a worksheet on all the CGT. The result was the same, however we got a query about how we calculated CGT as we did not report each CGT event separtly. There was no change to the clients tax return, however we had to do work, to show how we calculated the CGT.

The 2nd example was just the ATO's fault. We reported the CGT event, however the client had carried forward losses thus there was no CGT on the CGT event. We got a please explain. After 2 hours trying to work out what the issue was (the guy doing the audit at first wasn't helpful about what the mistake was) they guy realised about the carried forward losses. Even though we reported the CGT event, because there was no CG shown in the summary we got a please explain. Of course there were no changes to the tax return as we did everything right and the only reason why there was a review was because of the stupidty of the ATO.

The ATO even know when a business buys a car nowdays. They are like big brother. What the ATO knows about taxpayers is scary.

 

[Ridin-High]

Off specific topic but in an old school investment book i was reading, it talks about how the tax offices around the world move away from increasing direct (individual tax rates) and increase indirect ones (on goods/services) to cause less outrage

 

[Amadio]

They are like big brother. What the ATO knows about taxpayers is scary.

Good. As someone who pays taxes honestly this doesn't worry me in the slightest.

Love
Goodie Two-Shoes

 

[Melbournian]

The ATO data matching abilities scares me as an accountant. However often the people working in the ATO aren't that smart.

2 examples ccome to mind on the above point. We had a client that reported CGT, however only reported the net CGT rather than preparing a worksheet on all the CGT. The result was the same, however we got a query about how we calculated CGT as we did not report each CGT event separtly. There was no change to the clients tax return, however we had to do work, to show how we calculated the CGT.

The 2nd example was just the ATO's fault. We reported the CGT event, however the client had carried forward losses thus there was no CGT on the CGT event. We got a please explain. After 2 hours trying to work out what the issue was (the guy doing the audit at first wasn't helpful about what the mistake was) they guy realised about the carried forward losses. Even though we reported the CGT event, because there was no CG shown in the summary we got a please explain. Of course there were no changes to the tax return as we did everything right and the only reason why there was a review was because of the stupidty of the ATO.

The ATO even know when a business buys a car nowdays. They are like big brother. What the ATO knows about taxpayers is scary.

there have certain things like triggers in the IT system which shoots forward based on a certain criteria. Depends on your client's income etc, CG.

Such as buying a car in cash would be pretty stupid... taking a lease would be better even if you had the cash.

 

[Melbournian]

Good. As someone who pays taxes honestly this doesn't worry me in the slightest.

Love
Goodie Two-Shoes

same here - always try to get a reference number or ruling prior to doing something such as diposal of asset or depreciation as long as you followed based on the events given - u're be ok.

 

[bluestorm]

The ATO even know when a business buys a car nowdays. They are like big brother. What the ATO knows about taxpayers is scary.

there have certain things like triggers in the IT system which shoots forward based on a certain criteria. Depends on your client's income etc, CG.

Indead, it's quite easy now days. All the analysis and matching can be automated now days based on rules, and flagging breaches based on the rules to compliance.
Not just the ATO. But if you think you can cheat the tax system, it's only a matter of time before you'll trigger a breach or enquiry somehow.

Working in IT, I do exactly this as part of the job. For payments in and out of Australia. We just set up rules for suspicious transactions, stop suspicious payments, and compliance investigate these.

And as time goes by, systems will be able to do even more matching, various organisations and government bodies will become even for interconnected and share important information about people, and there will be even less change to hide for tax cheats.
It's only a matter of time before tax cheats get caught now days.

 

[Ed Barton]

The ATO data matching abilities scares me as an accountant. However often the people working in the ATO aren't that smart.

2 examples ccome to mind on the above point. We had a client that reported CGT, however only reported the net CGT rather than preparing a worksheet on all the CGT. The result was the same, however we got a query about how we calculated CGT as we did not report each CGT event separtly. There was no change to the clients tax return, however we had to do work, to show how we calculated the CGT.

The 2nd example was just the ATO's fault. We reported the CGT event, however the client had carried forward losses thus there was no CGT on the CGT event. We got a please explain. After 2 hours trying to work out what the issue was (the guy doing the audit at first wasn't helpful about what the mistake was) they guy realised about the carried forward losses. Even though we reported the CGT event, because there was no CG shown in the summary we got a please explain. Of course there were no changes to the tax return as we did everything right and the only reason why there was a review was because of the stupidty of the ATO.

The ATO even know when a business buys a car nowdays. They are like big brother. What the ATO knows about taxpayers is scary.

i've been told the ATO has greater powers of entry and search than the police. do you know if that is true?

 

[Tahoe]

If someone cheats on their taxes, then it unevens the playing field for the honest paying taxpayers.

 

[Ed Barton]

If someone cheats on their taxes, then it unevens the playing field for the honest paying taxpayers.

what's even worse is when someone gets a handout their not entitled to.

 

[wobbycarly]

Such as buying a car in cash would be pretty stupid... taking a lease would be better even if you had the cash.

Why? The last 3 cars I've purchased, I've paid cash. Why is this stupid? Why would I want a lease?

same here - always try to get a reference number or ruling prior to doing something such as diposal of asset or depreciation as long as you followed based on the events given - u're be ok.

Please explain. Why would I want a ruling when I'm, for example, disposing of an asset? Do I need to get a ruling every time I sell some shares?

i've been told the ATO has greater powers of entry and search than the police. do you know if that is true?

Don't know about the ATO, but I've been told that the Fisheries department in some states can search your house, and freezer for, say, crayfish if they suspect you have more than is legal! With no paperwork! Just suspicion. At least the police need to convince a judge that they have reasons to get a warrant.

 

[Melbournian]

Why? The last 3 cars I've purchased, I've paid cash. Why is this stupid? Why would I want a lease?

Please explain. Why would I want a ruling when I'm, for example, disposing of an asset? Do I need to get a ruling every time I sell some shares?

.

OK it's not stupid to pay cash - it is for someone who buys a luxury car when they're on a declared income that would not normally be able to pay for a car at that cost.

Ruling - is for more complex disposals. should have explained further rather than generalizing

 

[Ausprop]

all the saints above need to realise that it is not enough to just be honest. my mate is an accountant and was recounting one of his client's problems. A retailer. I can't recall if he only acepted cash or he didnt accept cash, either way client is straight up and down and it was just the policy he ran. Anyway the ATO benchmarked him and said according to your industry x% of you sales must be cash and x% credit, therefore here is an assessment for you. So the accountant's meter starts running at $300/hr whilst he chases some bloke down within the ATO... usual run around etc etc. Been a big hoo ha, dunno if it has been resolved or even will be resolved.

 

[jrc]

Don't know about the ATO, but I've been told that the Fisheries department in some states can search your house, and freezer for, say, crayfish if they suspect you have more than is legal! With no paperwork! Just suspicion. At least the police need to convince a judge that they have reasons to get a warrant.

There are a large number of gov't departments that can enter property without any form of warrant or often any form of notice to the owner/occupier beforehand

 

[Risky Business]

i've been told the ATO has greater powers of entry and search than the police. do you know if that is true?

Not internally they don't. But it might feel the same.

 

[Pa1nter]

Data matching with the Ato now it seems includes bonds lodged with rental bond authorities so self managing and collecting cash from tenants could be coming to an end.

Buying and selling property won't escape the taxman's gaze either. The ATO plans to collect the names and addresses of individuals and entities transacting with real property from various sources, including state revenue offices,residential tenancy authorities, and other government agencies. The ATO aims to address non-compliance with lodgment and debt payment through electronic bulk data-matching to identify potential ATO activity.


http://www.smartcompany.com.au/tax/...ay_11_jaunary_201311_01_2013&utm_medium=email

 

[Aaron_C]

Data matching with the Ato now it seems includes bonds lodged with rental bond authorities so self managing and collecting cash from tenants could be coming to an end.

Then people will just collect cash and not lodge the bonds....

 

[knightm]

There are a large number of gov't departments that can enter property without any form of warrant or often any form of notice to the owner/occupier beforehand

I can enter your property without a warrant if I believe your child is unsafe. I can remove your child (with p/c to the boss for the ok) if I believe your child is at imminent risk of significant harm.

Thing is Im too busy to bother unless the evidence is very good and things are looking very bad.

So you are probably safe.

Or are you?

 

[redwing]

They cannot work out data they don't get though

1. The bakery down the road in the LIA does a roaring trade selling pies, sandwiches, rolls etc to workers, though I note some money goes through the till and other money goes through a big white bucket

2. A deli I used to go to had a cash bucket as well, I recall buying some milk and rather than run it through the till they dropped the cash into a bucket and took change out from the bucket...I wondered at the time whether they would write the milk off at the end of the month

Others seem to have the art of receiving Benefits to a fine science

I'm sure there's many more examples

 

[Ed Barton]

They cannot work out data they don't get though

1. The bakery down the road in the LIA does a roaring trade selling pies, sandwiches, rolls etc to workers, though I note some money goes through the till and other money goes through a big white bucket

2. A deli I used to go to had a cash bucket as well, I recall buying some milk and rather than run it through the till they dropped the cash into a bucket and took change out from the bucket...I wondered at the time whether they would write the milk off at the end of the month

Others seem to have the art of receiving Benefits to a fine science

I'm sure there's many more examples

There are quite a few shops near my parents that only accept cash. I understand how the smaller ones can get away with skimming, but the larger ones?

There's a big Asian supermarket that only accepts cash. 6 cash registers working non stop on the weekends - not small purchases either. They must be pulling in tens of 000's a day. Maybe they've worked out it's cheaper to have a no cards policy and run everything through the books. But if so, it's an enormous risk that you'll be robbed. It wouldn't be hard to work out how they get the cash from the store to the bank and put a ski mask on...

 

[kathryn d]

I think it is a great idea.
Now make it more useful.
When someone has a judgement against another person/business, maybe it should be lodged at the ATO, so payments can be garnisheed.

Paying cash is not an issue. It is still legal tender.
Cross referencing invoices can pick up these inequalities.