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ATO’s data matching programs

The Australian Tax Office (ATO) has sophisticated data matching programs in place to ensure individuals and businesses are complying with their obligations and to uphold the integrity of the tax system for the community at large.

The Tax Office uses data matching to pre-fill tax returns, ensure people and businesses are lodging tax returns and activity statements when required, correctly declaring their income and claiming offsets, and meeting their tax obligations.

It helps to detect dishonest individuals and businesses operating outside the tax system, detect fraud against the Commonwealth and to recover debt.

The following areas are currently under close scrutiny:

Credit and debit cards
The ATO obtains data from banks and financial institutions to identify the total credit and debit card payments received by Australian businesses.

Specialised payment systems
Data on electronic payments made through specialised payment systems to Australian businesses is analysed in conjunction with data collected through the credit and debit card data-matching program.

Business transactions through payment systems
Data is collected from organisations that process electronic payments for businesses in a report.

Online selling
Details of online sellers who sell goods and services to the value of $12,000 or more is attained. Data is obtained from online selling sites where the data owner or its subsidiary:
– Operates a business in Australia that is governed by Australian law.
– Provides an online marketplace for businesses and individuals to buy and sell goods and services.
– Tracks the activity of registered sellers.
– Has clients whose annual trading activity amounts to $12,000 or more.
– Has trading activity for the years in focus.

Ride-sourcing
Data is obtained from ride-sourcing facilitators operating in Australia and/or their financial institutions to identify ride-sourcing drivers. This information is used to notify drivers and help them understand their tax obligations.

Motor vehicle registries
The Tax Office acquires data from all the state and territory motor vehicle registering bodies to identify all motor vehicles sold, transferred or newly registered, where the transfer and/or market value is $10,000 or more.

Posted on 22 November '17 by , under Tax.

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Self-managed super funds (SMSF) aren’t just about financial investment

Individuals may be looking to opt for an SMSF because these provide entire control over where the money is invested. While this sounds enticing, the downside is that they involve a lot more time and effort as all investment is managed by the members/trustees.

Firstly, SMSFs require a lot of on-going investment of time:

  • Aside from the initial set-up, members need to continually research potential investments.
  • It is important to create and follow an investment strategy that will help manage the SMSF – but this will need to be updated regularly depending on the performance of the SMSF.
  • The accounting, record keeping and arranging of audits throughout the year and every year also need to be conducted up to par.

Data shows that SMSF trustees spend an average of 8 hours per month managing their SMSFs. This adds up to more than 100 hours per year and demonstrates that compared to other superannuation methods, is a lot more time occupying.

Secondly, there are set-up and maintenance costs of SMSFs such as tax advice, financial advice, legal advice and hiring an accredited auditor. These costs are difficult to avoid if you want the best out of your SMSF. A statistical review has shown that on average, the operating cost of an SMSF is $6,152. This data is inclusive of deductible and non-deductible expenses such as auditor fee, management and administration expenses etc., but not inclusive of costs such as investment and insurance expenses.

Thirdly, investing in SMSF requires financial and legal knowledge and skill. Trustees should understand the investment market so that they can build and manage a diversified portfolio. Further, when creating an investment strategy, it is important to assess the risk and plan ahead for retirement, which can be difficult if one is not equipped with the necessary knowledge. In terms of legal knowledge, complying with tax, super and other relevant regulations requires a basic level of understanding at the very least. Finally, insurance for fund members also needs to be organised which can be difficult without additional knowledge.
Although SMSFs have the advantage of autonomy when it comes to investing, this comes at a price. Members/trustees need to invest time and money into managing the fund and on top of this, are required to have some financial and legal knowledge to successfully manage the fund.

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