Online sellers beware, the ATO has extended its current data-matching program for another 4 years to ensure that businesses and individuals are correctly meeting their registration, lodgment and tax obligations. The current program will affect most sellers on eBay Australia and New Zealand as well as Amazon. It is expected that around 20,000 to 30,000 account records will be obtained each financial year and matched with ATO data holdings to identify compliance issues. Compliance outcomes including taxpayer audits and voluntary disclosures are expected.
The ATO has extended its current data-matching program for online selling for another 4 years to capture 2018-19 to 2022-23 financial years. The program was previously due to finish in the 2017-18 financial year having had its start in the 2014-15 financial year. The program is aimed at ensuring businesses and individuals selling goods and services online have the proper registrations, are lodging returns, correctly reporting the payments received, and paying the correct amount of tax.
Previously, the online selling data-matching program obtained its data from eBay Australia and New Zealand Pty Ltd and Amazon Commercial Services Pty Ltd and it is expected that the current program will obtain data from the same providers.
In the current data-matching program, the ATO will collect data for individuals including name (given name and surname), date of birth, address, ABN, email address, and contact number. For non-individuals, it will collect data relating to the business name, address (business, postal, registered etc), ABN, contact name, email address, and contact numbers. In addition, the ATO will also collect the account details of the sellers on the various platforms including:
- account name;
- account identification number;
- account registration date;
- account registration type;
- store type;
- seller status;
- IP address;
- seller's linked PayPal account;
- number of annual sales transactions;
- value of annual sales transactions;
- number of monthly sales transactions; and
- value of monthly sales transactions.
The ATO estimates that details of around 20,000 to 30,000 account records will be obtained each financial year and that around half of that number will relate to individual sellers. Records obtained each year will be electronically matched with ATO data holdings to identify and address a number of taxation risks including:
- incorrect reporting of income within tax returns and BASs;
- failure to comply with ABN and GST registration obligations when online sellers transition from hobby status to being in business;
- failure to meet registration, reporting, payment or lodgment obligations.
According to the ATO, insights obtained from the program will be used to inform treatment strategies to improve voluntary compliance through education on taxation obligations. It will also be used to increase understanding of the behaviours and compliance profile of individuals and businesses that sell goods or services via online selling platforms. While the data will not be used to directly initiate automated compliance activity, where high risk activity or compliance issues are identified, the ATO will commence compliance action.
In previous years, the ATO used the online selling data-matching program to identify discrepancies between online sales and information declared in the sellers' tax returns. It was then used to deliver compliance outcomes for income tax and GST using taxpayer audits, voluntary disclosures and lodgments. It is envisaged that the current program will work in a similar way.
The data gathered from the program will be retained for 5 years from receipt of the final instalment of verified data files from the data providers. The ATO notes that this time period supports its general compliance approach of reviewing an assessment within the standard period of review which also aligns with the record keeping requirements for taxpayers.
Hobby or business?
If you are an online seller and are not sure whether you've crossed the threshold from a hobby to a business, we can help. We can also ensure that you have proper records to support your tax positions should the ATO come knocking. Contact us today for expert help.
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