The ATO is looking hard and long at the “cash economy”

 We summarise below some of the Data Matching Strategies being implemented

Credit and Debit Card data matching

The ATO obtains data from banks which identifies credit and debit card sales being made by Australian businesses. This data is matched against taxpayer records to identify those participating in the cash economy, and who are potentially skimming some or all of their cash takings or in other ways not reporting all of their income.

The credit and debit card data-matching program identifies transactions conducted for all merchants with a turnover of less than $10 million in the 2010-2011 financial year.

The bank data is then used to identify businesses that:

• are not reporting any or all of their income
• may be running a part of their normal business activities off the books or operating underground by avoiding their obligations to register and lodge returns

 Data is collected from the state and territory motor vehicle registering bodies. This data is then matched against taxpayer records to identify those participating in the cash economy, and who may not be declaring all their income or deliberately avoiding their tax obligations.

The motor vehicle data-matching program identifies all motor vehicles sold, transferred or newly registered in the 2010-11 financial year where the transfer and/or market value is $10,000 or greater.

This data is then used to

• identify taxpayers whose expenditure is in excess of their reported income
• identify businesses that sell vehicles and do not report, or under-report those sales
• help address potential non-compliance in the following areas:income tax, superannuation, goods and services, tax, fringe benefits tax and luxury car tax.

Online Selling data matching

Data obtained from eBay Australia and Trading Post Australia will identify members of online selling sites who are involved in selling goods and services of a total value greater than $20,000 in any of the past three financial years – 2007-08, 2008-09 and 2009-10.

This data is then used to:

• identify individuals and businesses that don’t report or under report their sales
• identify individuals and businesses that operate ‘off the books’ and avoid their obligations by not registering, lodging returns or making payments
• identify individuals and businesses who are participating in the cash economy, are non-compliant with registration requirements, are not reporting or under reporting sales and who are not meeting their lodgement and payment obligations under tax law.

Share Market Transactions data matching

Data is obtained from ASX Limited, Computershare Limited, Link Market Services Limited, Advanced Share Registry Services Ltd and Registries Limited.

This data is then used to :

• catalogue the external data holdings of the key organisations associated with share market activities
• assess the correctness of lodged income tax returns in relation to capital gains and income from the disposal/sale of shares
• ensure those entities that should be registered for goods and services tax are registered
• identify income tax returns that should have been lodged to have tax assessed on capital gains or income from share transactions.

Economic Stimulus Payments data matching

Data has been collected from government departments and businesses that manage payments for the Nation Building Economic Stimulus Plan, in order to detect participants in the Building, Construction and Ceiling Insulation Industries

This information will be compared with taxpayer records to determine whether taxpayers have reported these payments in their income tax returns and/or their business activity statements.

It is expected that approximately 30,000 records will be matched that relate to more than 5,000 taxpayers.

Building Industry data matching

Data obtained for the building services industry data-matching program includes:

• complaints information
• licensing information
• purchase information from building industry suppliers.

The ATO have obtained details of individuals or businesses that hold a trade account with purchases between $10,000 and $3 million in the 2009-10 financial year from a major Australian warehouse chain.

Also complaints and/or licensing information for the 2009-10 and 2010-11 financial years from New South Wales Fair Trading, the Queensland Building Services Authority, the Government of South Australia, and Consumer and Business Services has been collected

The Building industry data has been used to pilot the approach of using supplier data to identify businesses in the building industry who use cash transactions to avoid their tax obligations or who fail to report some or all cash transactions.

The data is used to identify:

• individuals and businesses that may be running a part of their normal business activities off the books or operating underground by avoiding their obligations to register and lodge returns, particularly in relation to transactions between consumers and business
• risks and trends of non-compliant behaviour by individuals and businesses that operate in the building services industry.

Coffee Suppliers data matching

The data collected from a number of major coffee suppliers identifies businesses that have purchased a total 15 kilograms of coffee, or more, per week in the 2009-10 and 2010-11 financial years.

The data is used to identify:

• businesses that do not report or under-report their sales
• businesses that may be running a part of their normal business activities off the books or operating underground by avoiding their obligations to register and lodge returns
• risks and trends of non-compliant behaviour by those involved in the coffee industry.