Australian Taxation Office data-matching program

The Australian Taxation Office (ATO) has advised they will make use of data-matching programs from the Department of Home Affairs in respect of passenger movements covering the 2016/17 – 2022/23 financial years.

The objectives of the data-matching program are to:

Promote voluntary compliance and increase community confidence in the integrity of the tax and superannuation systems
Improve knowledge of the overall level of identity and residency compliance risks including registration, lodgement, reporting and payment obligations
Gain insights from the data to help develop and implement administrative strategies to improve voluntary compliance, which may include educational or compliance activities
Identify ineligible tax and superannuation claims
Refine existing risk detection models and treatment systems to identify and educate individuals and businesses who may be failing to meet their registration, lodgement and payment obligations and help them comply
Identify potentially new or emerging non-compliance and entities controlling or exploiting those methodologies.

It is estimated that records relating to circa 670,000 individuals will be obtained each financial year. The data that is accessed will be electronically matched with certain sections of ATO data holdings to identify taxpayers that can be provided with tailored information to help them meet their tax and superannuation obligations, or to ensure compliance with taxation and superannuation laws.

Data items include:

Full name
Personal identifier
Date of birth
Gender
Arrival date
Departure date
Passport information
Status types (visa status, residency, lawful, Australian citizen)

The increased focus on data matching will enable the ATO to focus more closely on the residency status of individuals, especially during the COVID-19 pandemic period whereby individuals have been limited in their travel and might have been ‘forced’ to remain in Australia longer than originally anticipated.

These COVID-19 refugees may well have triggered taxation and superannuation obligations that were otherwise unforeseen and certainly unintended.

In addition, overseas employers should also be aware they need to track employees coming to Australia and potentially take steps to manage unforeseen Australian tax obligations.

Two scenarios that would trigger tax implications for Australian employees and foreign employers of Australians include:

Employees: Australians working overseas for extended periods are typically not taxed in Australia on their overseas income. However if that person frequently returns to Australia, for example because their family has remained here, then Australia may seek to tax all of the overseas income. The ATO will now have ready access to data to determine how frequently the person has been in Australia. Australians working in low or nil tax countries (i.e. UAE, Singapore and Hong Kong) are particularly impacted.
Employers: Australians who are usually based overseas for work may decide to return to Australia to ride-out COVID and work in Australia remotely for their overseas employer. Extended periods spent working in Australia could result in the employee being subject to income tax in Australia on the salary, which is paid by their overseas employer. The overseas employer also has employer tax obligations, such as income tax withholding from the salary, superannuation, fringe benefits tax and payroll tax. Further the employee may cause the overseas employer to have a taxable presence in Australia, notwithstanding it does not have a registered business in Australia. The actions of the employee may have ramifications for the employer, and we are aware of cases where the employer does not know where its employees are working, so the employer tax obligations and potential penalties for failure to comply are sleeper issues for the employer. However, the ATO will be armed with information, which may surprise some employers.

Debbie Cochrane
debbie.cochrane@bdo.com.au