Tax residency and data matching: ATO to scrutinise arrivals and departures

April 2021

The ATO's new data matching program is expansive and aims to reduce the risks of taxpayers not complying with their Australian tax obligations.

The Australian Tax Office has launched a new data matching program that will scrutinise the tax residency status of Australian and foreign residents based on arrivals and departure records of travellers into and out of Australia.

The travel records cover 670,000 individuals each year and will be provided by the Department of Home Affairs, spanning the 2016/17 to 2022/23 financial years.

What is the purpose of the new data matching program?

The ATO will be able to use the travel record data to verify both the identity and the residency status of individuals, which will also include information such as their full name, date of birth, arrival and departure date(s), passport information, and residency or visa status.

The access to this data will allow the ATO to ensure that the individuals are complying with their registration, lodgement, reporting, and payment obligations for tax and super.

Developing 'risk models'

The purpose of the program is to develop risk models to help it to profile, determine, and assess the tax residency status of taxpayers. However the ATO has said that this will not be used to directly initiate automatic compliance activity which can be done through other methods. 

Where there are discrepancies or non-compliance discovered as part of the program, the ATO will contact the taxpayer by phone, email, or letter with 28 days to respond and clarify any discrepancies that may be identified. Failing to respond or comply may result in the ATO taking action to instigate some form of prosecution.

The data matching program isn't just designed to identify those who may not be fully complying with their tax and super obligations, but also to reduce the need to contact taxpayers who are.

"It also reduces the likelihood of unnecessarily contacting taxpayers who are complying with their tax obligations. Data matching is an effective method of examining records of thousands of taxpayers to ensure compliance with lodgement and reporting obligations that would otherwise be a resource-intensive exercise."

How long will the ATO hold the data for?

Five years.

The data matching program will build on the ATO's visa data matching program that started in 2011 and follows similar programs such as the ATO's recent extension of its vehicle data matching program, which is designed to check whether taxpayers have the means to buy luxury cars proportionate to their reported income.

Should you be concerned?

If you have any concerns about your Australian residency status for tax purposes, we recommend contacting our international tax team on 02 9957 4033 to review your arrangements.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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