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Taxpayers beware: The ATO is more informed than you think

Navigating the intricate corridors of Australia’s taxation system can be daunting for the uninformed. Coco Hou, an Australian tax expert and head of Platinum Accounting Australia, highlights the risks faced by individuals and small businesses that opt to handle their taxes solo.

“Tax processes in Australia continue to grow in complexity. The often-underestimated fact is that by the time you file your returns, the ATO already has an extensive profile on your financial standing,” notes Hou.

What the ATO knows

Hou sheds light on the broad spectrum of sources the ATO uses to collate information about taxpayers.

“When individuals lodge their returns, they’re just one source of data for the ATO. The system legally obtains data from various entities, often without the knowledge of the individual concerned,” says Hou. She listed specific issues below…

Employers: Companies and entities making PAYG withholdings have to report these transactions. Furthermore, details on payments made to contractors or suppliers not quoting an ABN also land in the ATO’s database, feeding their data matching initiative.

Financial Bodies: Banks, and other financial institutions regularly report customer investment details and related income. If there’s a discrepancy between this data and your tax return, you might be flagged for review or even an audit.

Cryptocurrency: The crypto space is dynamic. The technology behind cryptocurrencies might offer anonymity, but identity is required at certain transactional phases like at banks and exchanges. This data isn’t beyond the ATO’s reach.

Superannuation: All money movements in and out of super funds are on the ATO’s radar.

Overseas Entities: Holding funds internationally? The ATO has its ways. International tax agreements facilitate a two-way flow of information.

Government Bodies: The ATO collaborates with other government entities like Services Australia and state revenue offices. This inter-agency data sharing ensures the ATO gets a holistic view of an individual’s financial landscape, streamlining tax obligation calculations.

Tax Forms and Whistle-blowers: Personal information submitted through tax forms is another information source. Hou also emphasizes the role of the public. Every year, the ATO receives a plethora of tip-offs, helping pinpoint potential discrepancies or fraudulent activities.

The imperative of professional guidance

Understanding the ATO’s data collection avenues is just the tip of the iceberg. Hou advocates for professional assistance. She says, “Engaging a qualified accountant, especially one registered with the Tax Practitioners Board, is imperative. They not only alleviate the tedious tax process but also ensure accuracy and compliance.

“Tax intricacies can be overwhelming. A reliable accountant is instrumental in ensuring individuals and businesses remain penalty-free. The reality is, the ATO has a comprehensive financial snapshot of everyone – more than most realize.”

About Platinum Accounting Australia

Platinum Accounting Australia is a nationwide consortium of accounting and bookkeeping entities, focusing on delivering effective business, tax, and accounting advisory. Established in 2008, they aim to offer actionable insights tailored to individual client needs. For more information, visit www.platinumaccg.com.au.

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