ATO Data matching - checking tax returns

The ATO's data matching systems checks accuracy of returns with information acquired from banks, financial institutions and investment bodies, employers, welfare agencies and other government agencies.

Data is exchanged with Centrelink, Child Support Agency and Department of Immigration and Citizenship. Negotiations are also underway to acquire data from the Australian Stock Exchange (ASX) and there are plans to expand other sources of data.

The ATO says "The purpose of the data matching program is to identify cases where there is a risk of either incorrect payment of personal financial assistance or tax evasion."

While this may seem sinister, many ATO generated tax return adjustments occur as a result of genuine errors or ommissions. Typical ommisions include interest income, a small Centrelink payment or a PAYG Payment Summary not received. I believe these omissions often occur as a result of clients wanting there tax returns prepared and lodged as early as possible after the end of the financial year to either "get it out of the way" or to finalise their family payments for the year.

Improvements to tax agents' access to much of this information allows us to check accuracy of data when preparing the returns. However, early in the financial year, a lot of the data is not yet available.

We encourage clients to check for gaps in employment, bank statements and Centrelink/familiy payments prior to preparing ther tax returns.

By David Maynard
My Tax Zone

Copyright 2014. My Tax Zone.