Our tax system can be difficult to navigate if you don’t stay on top of the latest news and updates. Coco Hou, an expert in taxation and accountancy, warns that anyone who does their own taxes should be sure not to ‘upset’ the tax office.
She says the ATO knows a lot about you by the time you lodge your tax return.
“The ATO collects personal information about you from a number of different sources as well as from yourself when you lodge your return,” she says.
“The law allows the ATO to collect this information from other people and entities without you even knowing that this information is being shared.”
Ms Hou says financial institutions are required to send the ATO information about their customers’ investments and investment income.
“So, if you have funds in a bank account somewhere including income from shares, property investments or other income, the ATO will know all about this by the time you submit your tax return.
“If your return differs to information that the ATO holds, then this could cause problems or trigger an audit.”
She says the ATO also collects information from employers, super funds and other intermediaries. “If you have paid money into a super fund or taken funds out of a super fund, the ATO will know.”
And don’t bother hiding any funds overseas. Just as Australia discloses information to treaty partners overseas, authorities in other countries share information with the ATO under international tax agreements, she says.
Also, government agencies such as Services Australia and state and territory revenue offices provide the ATO with personal information. “The ATO uses this information to help build a complete understanding of your financial situation so it can administer taxation laws, determine your income tax obligations and calculate entitlements accurately,” Ms Hou says.
In addition, the ATO runs sophisticated data-matching programs. It receives a lot of data and it uses the programs to validate this data and match it against its own information to identify where people and businesses may not be reporting all their information correctly.
“Data matching is a powerful tool that helps the ATO find issues and escalate them quickly.”
Did you know the ATO draws information about you from so many sources? Are you happy with that?
.
