Tax residency data-matching program launched by the ATO

The tax residency status of Australians and foreign residents are set to undergo closer scrutiny. The ATO is launching a new data-matching program that will cover more than 600,000 individuals each year.

Matching external data with that held by the ATO helps to ensure that people and businesses comply with their tax and super tax obligations. It also helps to detect fraud against the Commonwealth.

The Department of Home Affairs will now provide the ATO with arrival and departure records of travellers to and from Australia for the 2016–17 to 2022–23 financial years.

The new initiative will allow the ATO to verify the identity and residency status of individuals. The data matching program will include measures to ensure that they are complying with their registration, lodgement, reporting and payment obligations for tax and superannuation purposes.

The ATO will analyse a range of information each financial year such as, arrival and departure dates, date of birth, passport details and residency / visa status.

Data collected through the program will not be used directly to initiate automated compliance activity. The ATO suggest that it will help it develop risk detection models to help profile, determine and assess taxpayers and their tax residency status. Taxpayers can still be identified for compliance action through “other methods”.

Home Affairs records obtained by the ATO will be held for five years, and builds on the ATO’s visa data-matching program that began more than a decade ago.

Where discrepancies are discovered, the ATO will contact individuals by phone, letter or email and provide them with at least 28 days to respond before administrative action is taken.

The new data-matching program follows a trend of other similar programs, including the ATO’s most recent extension to its motor vehicle data-matching program that aims to identify taxpayers who are purchasing expensive cars that are not proportionate to their reported income.

The introduction of the new program reduces the likelihood of unnecessarily contacting taxpayers who are complying with their tax obligations.

The ATO are required to comply with strict laws to protect your privacy when collecting data from other agencies and organisations for 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.

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