Thirty years ago, when I managed the local credit union I received regular requests ( if memory serves it was called a S263 query) from the Australian Taxation Office to search through financial records in an attempt to find those taxpayers who had not declared significant interest income.
Through the use of what’s called ‘data matching’ the ATO can now analyse the data sent to it after interest payments have been credited to your account and determine if you have received income not declared on your income tax return.
In pre-GST days the small businessman was not subjected to the same scrutiny as his salary-earning cousins. He could, without fear of retribution from the tax collectors, not bank some of the cash he collected. And, so long as he paid cash for his supplies, nobody was the wiser. Then GST was introduced. It would broaden the tax base we were told. The states would get the revenue; the rate couldn’t be easily altered, all in all, a good thing for the country. A new method was developed for the collection of data to calculate how much GST to pay; it was called the Business Activity Statement.
Remember 4000 new officers being employed to help small business complete their BAS ? Those ATO officers are now called ‘compliance’ officers and are subtly investigating whether or not Sams Sandwhich Shop is declaring all the income received.
Now an ATO officer will turn up unannounced and quiz Sam about how much bread he bought. “I notice you claimed $5,000 GST you spent on buying bread from Darwin Bakery” the official says to Sam. “That’s right” say Sam ‘we bought $50,000 worth of bread”. “Then how do you explain your income tax return reports you sold only $40,000 worth of sandwiches” the officer enquires.
Not satified with developing a template for every small business in Australia the ATO has now turned it’s attention to creating an individual profile of every taxpayer.
The Australian Taxation Office is spending $4.7 million to upgrade its database and give tax collectors new tools to analyze taxpayers. The aim is to create an individual profile of each taxpayer, showing demographic information as well as his/her tax compliance history.
Information gathered will include taxpayer salaries, amounts owing to the ATO, tax payment history and tax returns. Personal details like age, gender and marital status may also be included.
The ATO said when contacting individuals for payment in future, it would base its approach on compliance behaviour and demographic attributes gathered from the database.
All the more reason to have nothing to do with the GST/Tax system I say. From now on I think I’ll gradually become a sixty year old drop out, with no assets, no income and no respect for the ATO.