The Government has announced that over the coming four years (commencing 1 July 2019), the Budget will provide $82.4 million to support the expansion of data collected through Single Touch Payroll (STP) by the ATO and enhance data matching capabilities for Commonwealth agencies.

As a business owner, you will be aware that STP requires employers to electronically report salary and wages information (including superannuation data and PAYG withholding amounts) to the ATO before payment of every pay run. The aim of STP is to improve data matching between employer, employee and superannuation funds.

The measures announced in the Budget aim to also fund the data matching of income details with the Department of Human Services, for recipients of income support. This will effectively reduce the likelihood that welfare recipients could receive an overpayment that they would then be required to repay, circumventing the need for DHS’ controversial robo-debt system.

“Each fortnight, income data received through an expansion of STP data-sharing arrangements will also be shared with the Department of Human Services for recipients with employers utilising STP,” budget documents state.

The balance of the funding will go towards expanding the data collected through STP, to reduce the obligation to report the same data to multiple Government agencies.

Ultimately, it is our view that the data collected under the STP system and the expansion of the data will be used by the ATO to ensure individuals and employers meet their employmer tax obligations – in particular superannuation guarantee compliance and provide helpful data to improve the collection of taxes.

Whilst Australians received tax refunds of about $107 billion in the year (the result of some 10 million individual income tax returns lodged), more than $16 billion has been added to federal government coffers through tax audits and other compliance activities by the ATO, including $1 billion in voluntary disclosures during 2018/19.

New figures published by the Tax Office show that client engagement activities and detailed tax audits, raised $15.3 billion in additional revenue in 2018-19.  There were also more than 530,500 adjustments to tax returns as a result of audit activities, up from 360,000 a year earlier. The increase is due to better use of data and advanced analytics, as well as automation targeting individual taxpayers.

The Institute of Public Accountants senior tax adviser Tony Greco said the increased revenue was the result of better data use, and some 70,000 tip-offs from members of the public.

“They’ve received a lot more funding, courtesy of things like the black economy taskforce,” he said.

“The ATO has got more resources and obviously there’s a payback for that. The government expects a return and with extra funding they can produce better returns for their money.

Mr Greco said better use of data analytics and data matching increased the risk for taxpayers doing the wrong thing.

“They’ve always had benchmarks on the cash part of the economy and anyone who operates outside the benchmarks attracts a red flag for a visit.

“With people moving to more digital transactions, it is becoming more difficult to hide and there’s a lot more tips-offs from the public.

“People are acting with their feet, and record numbers are picking up the phone on who might be doing what,” he said.

If you have any questions or need advice and clarity specific to your business, feel free to contact Semmens & Co on 03 8320 0320 for a free consultation.