Data Matching & Reportable Income

ato data matching

ato logoPeople often think of the Australian Taxation Office (ATO) as the big bad wolf on the prowl come the end of the financial year. And taking a third-person perspective, some would say the ATO has the view of “what’s yours is mine, and what’s mine is mine.” In translation… “Everything belongs to me” – which to an extent could be held true, but the system is there for a reason.

While Australia has a progressive tax system accompanied by various concessions and incentives, an alarming number of taxpayers are failing to declare all their assessable income when preparing their income tax returns. While sometimes deliberate, the majority of the time it’s a simple oversight that certain income items may be omitted.

In a report to the Commissioner of Taxation, it was noted that an average of 2.6% of all returns lodged in prior years were flagged through the ATO’s data-matching system as having conflicting information (or lack of).

Roughly 1 in 39 people are omitting or incorrectly reporting income or other financial related information.

meetingOver the years the ATO has been continuing to improve their database & delivery of information it provides to both registered tax agents and the general public to offer a “guide” on what is, and isn’t assessable income. While the list is quite extensive, the first and most pressing question that is worth asking is “is this income as result of business, investment, beneficiary entitlement or anything with the intended purpose of making a profit?” – If the answer is “Yes,” chances are that the ATO will know about it, or expect you to inform them about it. Additional information can be found here.

As result of the ATO’s attempts to streamline and cut down on misinformation, the penalties for openly doing so are as follows:

  • Failure to take reasonable care = 25% of the shortfall amount
  • Recklessness = 50% of the shortfall amount
  • Intentional disregard = 75% of the shortfall amount[1]

The ATO isn’t against giving the benefit of the doubt when it comes down to it. Generally speaking they are quite forgiving if the taxpayer is a first time offender, or if they are able to prove that they took reasonable level of care. The onus of proof remains with the taxpayer and should the ATO be satisfied then no shortfall penalties will generally be applied. As always, it’s recommended to stay safe and speak to an accountant before proceeding to lodge should there be a change in your financial circumstances year to year.

If you have any questions relating to Data matching please feel free to contact Optima Partners on 08 62672200

Adam Kitching






Adam Kitching – OP Accountant



[1] Australian Taxation Office. 2016. “Statements and unarguable positions”


Data Matching & Reportable Income
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