The ATO is embarking on a “Towards 2020 and Beyond” project, whereby the self-assessment process will be streamlined. How the changes will pan out, when we are talking about a huge Government department, is yet to be seen. You can rest assured there will be speed bumps along the way as they roll out new systems.

Some of the impetus and rationale behind this push for change is driven by how the ATO is now able to obtain more information than it previously had the ability to source. As more and more data becomes available from around the world by working with other government agencies and financial institutions, the ATO has to determine how it will use this information and how to best serve the community.

Identifying non-compliance

The ATO is developing and implementing more sophisticated techniques to ensure that everyone is disclosing what they should be disclosing. With increased intelligence capabilities, the ATO has a better chance of detecting refund fraud, “phoenix” behaviour, identity crime and organised crime. For small businesses attempting to hide income and operate in the hidden or cash economy, this will become increasingly difficult. And for businesses of any size, increased data-matching capability enables the ATO to more easily identify non-compliance and dishonest behavior.

The ATO has announced a compliance project that will target small businesses. For the 2014/2015 financial year, they will undertake data matching operations, including matching credit and debit card data against records lodged with the ATO. To date, they have been focusing on the building and construction industries, as well as cash transactions in restaurants, cafés and other hospitality businesses.

We have seen it!

We have certainly seen increased activity by the ATO among our clients as increasingly sophisticated information gathering techniques become available. The ATO has definitely been monitoring eBay transactions. And if an individual’s sales have been more than $10,000 a year and the business income has not been reported, questions have certainly been raised by the ATO.

The ATO is aware that a small percentage of people deliberately and dishonestly break the law to avoid paying their tax or to claim refunds and other payments to which they are not entitled. Last year the ATO contacted more than 350,000 taxpayers about errors or omissions in their tax returns. It is expected that the ATO will do the same this year. Assistant Tax Commissioner Adam Kendrick told Fairfax Media that “every return is scrutinised as it’s lodged.”

No need to worry

None of this should concern honest taxpayers who endeavour to abide by the rules. However, each year more than 600 million pieces of data are reported to the ATO by third parties including banks, employers, health insurers, state and federal agencies and overseas treaty partners. This means though that with the ATO gathering and analysing more information, you can expect greater scrutiny. With our help and a straightforward approach to disclosing information, you should have no trouble with these new ATO regimés which are designed to identify those people who are trying to cheat other taxpayers.