The Australian Taxation Office discreetly announced its latest major data matching program in the Commonwealth Gazette last week and it hasn’t raised a whimper in the press. Known as the WorkCover Western Australia and Tasmania Data Matching Project the Tax Office proposes to match data obtained from WorkCover WA, Tasmania, NT and ACT with the Tax Office’s taxpayer records.
Should employers and individuals in those states be concerned? You betcha! The ATO ran pilot programs with WorkCover in VIC, SA, NSW and QLD between 2003-05 and found a consolidated revenue cash cow with 740,000 entities that registered with WorkCover in those states.
An average of over 11% was found to have incomplete income tax lodgement records and together with other compliance activities (in areas such as Pay As You Go (Withholding), GST and Superannuation) this project has raised over $23m in net tax and penalties.
After exceeding revenue targets it’s little wonder the ATO has extended the program into the other states. The matching process will identify employers registered with WorkCover in those states who may or may not have had dealings with the Tax Office. The total number of registered employers in these jurisdictions is estimated to be 300,000. This number will likely include more than 5,000 individuals.
The process will involve checking the matched WorkCover data against the profile of clients registered on the Tax Office systems. Matching will be confirmed against employer’s ACN, ABN, name and address. This information can be used to check whether the employer has outstanding tax obligations such as ABN/GST non-registration or non-lodgement of income tax returns and Activity Statements.
The ATO’s increased use of major data matching programs is due to an Australian National Audit Office (ANAO) report to Parliament in November 1999 that indicated there are risks to the integrity of the tax system when people don’t comply with their tax obligations including those operating outside the tax system.