The ATO has begun using data matching programs in the property industry

With new data matching technology in the hands of the Australian Taxation Office, more industries are being put under the spotlight. Property investment is one of the biggest wealth generators in Australia, and is one of our biggest industries, accounting for 23.4% of Australia’s GDP in 2016. So, it was only a matter of time before the ATO increased its scrutiny on the industry.

Data matching technology has made increasing scrutiny easier than ever. But what does this mean for you and your investments? Here is a guide to help you understand data-matching and its effects on you.

What is data matching?

Data matching utilises data from a range of external sources and attempts to match it with data provided in your tax return. It is designed to recognise discrepancies in the data that has been reported to the ATO and the data that financial management or other apps collect. If any discrepancies are found the ATO will reach out to you to find out why.

Ultimately this system is built to stop deter people from altering the income they receive on their tax returns in order to pay less tax. This can often cost billions of dollars worth of tax income every year. So, the ATO is very keen on cracking down on this. A benefit of this though is that for many income sources your income may be pre-filled into your tax return making it far easier to complete.

How are they getting the data?

None of this data is coming from your property manager or Agent. Instead, the data comes from a combination of digital sources that you may use to manage your property and finances. For example, property management software providers will give the ATO this data. The data may also come from the software provider, your property manager utilises to manage their trust account and to ensure they are meeting all legal obligations.

Property is not the only industry this technology has been deployed on either. Data matching programs are used with online sales, ride-sourcing, cryptocurrency, motor vehicle registries, and much more.

What data is collected?

According to the ATO, for the property industry, the following data is collected:

Property owner:

  • Unique ID
  • Name
  • Business name
  • Business contact name
  • Addresses
  • ABN
  • Email address
  • Contact phone numbers
  • BSB number
  • Bank account number
  • Bank account name

Rental property:

  • Unique ID
  • Address
  • Date the property was first available to rent
  • Rental income category
  • Rental income amount
  • Rental expense category
  • Rental expense amount
  • Net rent amount

Property manager:

  • Business name
  • Property manager name
  • Business address
  • Contact phone number
  • Email address
  • ABN
  • Licence number

What effect does this have?

This won’t have any effect on the vast majority of investment property owners. You will be able to carry on as you were and not blink an eye at this. All of this data was already provided to the ATO by you manually, now it is automatic. It may even mean your tax return is slightly easier to complete each year, a big win.

However, if you are in the minority of property owners who like to get ‘creative’ on your tax return, be careful. The ATO will be collecting data for 2018-2019, all the way through to the 2022-2023 financial years. So, think again if you were planning on submitting your creative tax return.

Conclusion

Technology is evolving, making it far easier for the ATO to spot and catch those who may be reporting their income incorrectly. If you think you may have made some mistakes when reporting your tax return it is a good idea to submit an amendment in order to correct your mistakes. While you may have to pay back some money, it will be far better than waiting for the ATO to catch you out, especially if it was an honest mistake.

Link Living is connected with a team of chartered accountants who can assist you with managing your property portfolio’s tax. Come have a chat with us and see how we can help you.

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