State revenue offices and the ATO information sharing

The information provided by third parties to the Australian Taxation Office has long fuelled the tax office’s data matching programs. However, increasingly information exchanged between the tax office and other government agencies is providing the starting point for compliance programs at both a state and federal level.

The tax office uses the information it receives from the various state revenue offices to identify potential discrepancies such as whether the profit from the sale of a property has been included in the taxpayers’ tax return or whether the transaction has been properly reported for GST purposes.

At a state level, the offices of state revenue are using the information reported in income tax returns to identify eligibility for land tax exemptions, the first home benefit schemes and duty concessions.

Examples of the compliance activities we have seen recently include:

• the Queensland Office of State Revenue writing to a number of landowners who had incorrectly continued to claim an exemption for land tax after they had had a change in circumstance;
• the Australian Taxation Office data-matching land sales to capital gains reported in the taxpayers return.

Employers are also under scrutiny, with the information being reported in income tax returns and business activity statement being used to identify employers who may have failed to register for payroll tax or workcover, as well as to flag variances between the amounts reported to the various state offices and agencies.

Conversely, the tax office is using the information it has received to identify businesses that may be required to register for PAYG Withholding.