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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Ian
Ian
15 years ago

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.

Homer Paxton
Homer Paxton
15 years ago

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!

Patrick
Patrick
15 years ago

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!

whyisitso
whyisitso
15 years ago

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.

derrida derider
derrida derider
15 years ago

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.