Assistant Commissioner, Kath Anderson, says the ATO is looking for income from second jobs and capital gains on cryptocurrency.
Australians leaving cash payments and foreign income off their annual tax return face being caught through new data-matching technology deployed by the Tax Office.
Part of efforts to recover an annual shortfall of up to $1.4 billion in undeclared income, the Tax Office says it is developing new analytic tools to analyse troves of government data to identify inconsistencies.
From this month, Australia will exchange information with more than 100 overseas tax authorities to identify taxpayers with foreign income sources, as well as using data obtained from AUSTRAC, the Foreign Account Tax Compliance Act and other international exchange agreements.
Analysis of AUSTRAC data shows Australians most commonly receive foreign funds from Britain, the US, China, Switzerland, Hong Kong, New Zealand and Singapore.
Assistant Commissioner, Kath Anderson, said the ATO was at the forefront of developing a single global standard for the collection, reporting and exchange of information on foreign tax residents.
“Tax lost from under-reported income is a significant cost to the community. While the amounts might be small individually, together they are adding up to a lot,” Ms Anderson said.
“We understand that people make mistakes and can forget to include some of their income but those who leave out income to avoid paying their fair share of tax should be aware that there can be penalties and interest.”
Penalties for misreporting ranged from fines of between 25 percent and 75 percent of the shortfall, as well as repaying the money owed.
“The most common mistake we see is taxpayers leaving out cash wages. But we are also seeing taxpayers either deliberately or accidentally failing to include income from second jobs, capital gains and cryptocurrency, the sharing economy, the gig economy, and foreign – sourced income.”
The Tax Office is expecting to process a record amount of information this year, potentially making tax returns faster and easier but more quickly identifying people who are failing to declare income.
More than 112,000 tax returns have already been auto-adjusted using compliance systems in July and August, recouping $53 million.
“We are concerned that taxpayers may be failing to include foreign income from pensions, employment, investments, business income or capital gains on overseas assets,” Ms Anderson said.
“The collection of this additional data will help us identify people who are deliberately omitting income from their tax return , but will also help those who have several streams of income who find it hard to keep acurate records.”
In July, the ATO revealed that the scale of profit shifting by multinationals was being dwarfed by tax-avoiding wage earners. The difference between tax collected and what is owed by the country’s 9.6 million taxpayers is estimated at $8.7 billion or 6.4 per cent. of the total tax take. The figure is more than three times the estimated loss from large companies.
The ATO received $130 million in new four-year funding from the May budget to ramp up income-matching measures and audits to track down unpaid tax from foreign income, distributions from partnerships and capital gains information for property and shares.