Improving tax compliance – enhanced third party reporting, pre-filling and data matching
The Abbot Government has confirmed its intention to proceed with the 2013-14 Budget measure, ‘Tax compliance – improving compliance through third party reporting and data matching.’
This new measure is designed to improve taxpayer compliance by enhancing the information reported to the ATO by a range of third parties through the introduction of new reporting regimes. That means they are shutting the door on loop holes where people have failed to report transactions in an attempt to avoid CGT or Income tax
Some of the elements of this measure can be implemented by the ATO changing its administrative practices, whereas others would require changes to the tax laws. Essentially, the law changes would involve the establishment of new, and strengthen existing, reporting systems for:
- sales of real property; shares; and units in managed funds
- sales through merchant debit and credit services
- managed investment trust and partnership distributions, company dividend and interest payments
- taxable government grants and specified other government payments
- transactions reported to the Australian Taxation Office (ATO) by the Australian Transaction Reports and Analysis Centre.
The proposed reporting regimes would be designed so that in most cases, third parties need only provide information to the ATO that they receive or record in the ordinary course of their business or operations. However, as an effective third party reporting regime depends on the ATO being able to match the reported data to the relevant taxpayer, some additional identifying information may be required.
This measure is currently scheduled to commence from 1 July 2014 so be prepared for extra questions from some of your service providers like Solicitors, Conveyancers, Real Estate Agents, Share Brokers, Fund Managers, Banks and Credit Card companies depending on what the ATO requires them to provide as part of the reporting system to help match the data with tax payers records.
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