Data matching; and cracking nuts with sledge hammers

Can someone please, please, please tell me why there are always stories in the press about our glorious tax office going on compliance rampages and ‘discovering’ whole heaps of people who haven’t put in a tax return? Crikey reports as follows:

Data matching has become a favoured audit tool for tax gumshoes. Previous success in matching external data to ATO information with professional industry groups produced bumper harvests for consolidated revenue. The Legal Profession project conducted by the ATO in 2004 uncovered a rat’s nest of tax impropriety including barristers and solicitors not lodging tax returns (in some cases for many years), 116 barristers being in debt to the ATO for $65m while debt for solicitors nationally is around $180m, scores of barristers turning to bankruptcy to avoid paying tax.

Can someone please tell me why the ATO can’t data match it’s own data? Here’s an idea. The ATO could punch the relevant commands into its database and ask it to spit out the names of people who filed returns in the second last financial year who haven’t sent in a return for the next financial year. If their system won’t do this, perhaps they could consult a company (or a small club) that manages subscriptions and find out how they discover that people haven’t renewed their subscription. Perhaps they could use MYOB.

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7 Responses to Data matching; and cracking nuts with sledge hammers

  1. Ian says:

    And the ATO could invest in Law Society Diaries to check off the list of practicing barristers to see which ones arent up to date with their tax affairs.

  2. Homer Paxton says:

    I think the ATO are like Pollies in that they rely on people having very poor memories.

    you know I have NEVER heard of one result of these audits yet!

  3. Patrick says:

    I think Ian’s comment is probably more on track, since I’m not sure how they could use any indigenous data-analysis technique to pick up barristers whose only relation to the ATO is the occasional brief as opposing counsel!

  4. whyisitso says:

    A lot of this stuff is the usual scare propaganda by the tax office. As well there may well be numerous reasons why people who put in a tax return the year before last might not have last year, including death, working overseas, dropping out of the work force and so on. Another explanation for the lack of 100% follow up is that audit staff may be more profitably used in other investigative areas.

  5. It might be an explanation of why people haven’t filed a return, but it’s not an explanation as to why the ATO can’t turn up people who’ve not filled in their tax return until they do some audit of people who’ve taken out low doc loans or some other data matching adventure.

  6. derrida derider says:

    But Nic, the ATO have been doing just this since the year dot. If you lodged at tax return last year but didn’t this year you will get a polite-ish letter from the ATO asking you what’s up. That’s why the Tax Pack has a question asking if this is likely to be your last tax return, so they don’t bug you with an unnecessary enquiry. I suspect that even the media-conscious ATO might think this a bit too much old hat to merit a press release.

    There are of course plenty of reasons why someone mightn’t lodge a tax return when they have before – they’ve retired on to a pension, they’re living overseas, they’re dead, etc. So the letter has to be a bit circumspect.

  7. Yes DD, that’s right. But I’m pretty sure I’ve seen the ATO quoted as saying that their pursuit of those on low doc loans has turned up people who’ve not put in tax returns. It’s always seemed very peculiar to me. Recall also that many moons ago, it was revealed that Paul Keating got about three years behind on his tax returns. Now you can’t get three years behind on any other bills without consequences. In fact if memory serves correctly he was in credit, but the whole thing was pretty peculiar. Certainly there are no other accounts I know of that one can just let go into abeyance for a few years without consequences.

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