16th June 2017

The Australian Taxation Office (ATO) has attempted to keep abreast with contemporary developments impacting the taxation system. If the 2016/17 financial year is to serve as an indicator, the agency is yet hit the mark.

Services born through the sharing economy have commanded the front seat in society’s consumer preference. Such services have also gained considerable attention from the ATO – especially the ride sharing application, Uber. The ATO expressed concerns that such entities, namely Uber and Airbnb, were not paying their fair share of tax, so the net widened for more scrupulous data matching efforts in this area.

Superannuation also appears to feature on the ATO’s current hit list. Despite more than $85 billion being paid in superannuation each year, the ATO has conveyed dissatisfaction with the level of compliance by employers in relation to Superannuation Guarantee obligations. In 2015-16 the ATO initiated nearly 21,000 cases which addressed Superannuation Guarantee non-compliance, raising $670 million, including penalties, from a range of reviews and audits. The ATO undertakes a range of compliance activities to detect and deal with non-compliance, one measure is the utilisation of data matching from third party referrals.

Both the sharing economy and superannuation have the commonality of data matching as a means to monitor compliance. The ATO has been zealous in its efforts to capitalise from data matching capabilities, which has subsequently increased audit activity from both compliant and non-compliant taxpayers.

Recently the ATO’s data matching capabilities were linked to Centrelink’s ‘robo-debt’ saga. In an effort to target welfare payments, Centrelink declarations were data matched with tax returns. As a result, more than 20,000 letters were sent to individuals with perceived discrepancies in relation to their Centrelink declarations. Of this figure, at least 20 per cent of letter recipients were later found to owe nothing. Whilst the issued correspondence was questionable, the onus rested on individuals to allocate time and resources to clear any perceived wrong doing. Alas, the recent robo-debt saga has not diminished the ATO’s plans to charge full steam ahead as the agency anticipates contacting more than 300,000 taxpayers when detecting 'once only' discrepancies in tax returns this year. When it comes to automated data matching, it appears that the ATO will pursue utilising these capabilities, and would likely focus on a broader range of taxpayers in the future.

So far in 2017 we have seen that technology dictates evolution. Whilst the outcomes of the robo-debt controversy were not ideal, it was insignificant in comparison to the dominance of cyber crime which has wreaked havoc not only in Australia, but worldwide. Even the ATO fell victim to a cyber crime attack, and is still vulnerable to future cyber attacks according to a Joint Committee of Public Accounts and Audit (JCPAA) report from April 2017.

Accountants are of similar appeal to cyber criminals as they are privy to sensitive information such as bank account details and tax file numbers, the same information which is held by the ATO.

“Accountants believe that cyber crime will not affect them, however, they are prime targets to cyber criminals. So, the question really is not if they will be targeted, it is when they will be targeted. Cyber crime has skyrocketed in 2017, and it looks as though activity in this area will gain more momentum over time” said Accountancy Insurance’s Associate Director of Professional Risks, Karen McDonald.

The team at Accountancy Insurance benefit from the insights of tens of thousands of audit activity claims, as well as expertise in analysing cyber crime trends.

To understand the scope of audit activity and cyber crime occurring in Australia contact the Accountancy Insurance team on 1300 650 758.





         Chartered Accountants

Tax Institure