NICK BRUINING: Incredible and unusual places the ATO searches to catch out Australian tax dodgers

With just three sleeps to go until the October 31 personal income tax return deadline passes, you might be tempted to “forget” a few things when it comes time to record your income.

That might include the odd dollar or two you made trading in the supposed anonymous world of cryptocurrency, the side-hustle buying and selling junk on Facebook’s Marketplace or even the interest you earned on that European bank account you inherited from Grandma.

There’s a good chance the Australian Taxation Office has you in its sights already — and if you do decide to try it on, a “please explain” letter might soon replace the tax refund notice you are expecting.

In the past, dodging tax was almost a national pastime. These days, however, things have changed dramatically.

The ATO said that over the past five years it had received nearly 250,000 tip-offs and, of that, 90 per cent resulted in further investigation.

Examples include a hairdresser who operated on Facebook and would only accept cash, and a fish and chip shop owner whose lifestyle and travel habits didn’t seem to match the declared income from the business.

ATO assistant commissioner David Goding said tip-offs came from a variety of sources, including customers, staff, competitors and even family and friends.

“When we receive information through a tip-off, we crosscheck the information and assess whether further action is required,” Mr Goding said.

The information available to the ATO for “crosschecking” is quite extraordinary.

As you would expect, wage, salary and superannuation data is routinely forwarded to the ATO along with bank interest, share dividends and distributions from managed investment funds. Add to that, transaction data from land title authorities such as Landgate.

Gig economy players don’t miss out, with rideshare, food delivery, short stay accommodation and other payment data forwarded to the ATO. All the usual operators are likely to be included including Uber, Menulog, Airbnb and Fiverr.

Trading and transactional data is also provided to the ATO from trading platforms such as Marketplace, eBay and Gumtree.

That extends to crypto exchanges and other trading platforms, too. While some might imagine that the world of crypto allows them to bypass the traditional forms of accountability, at some point in time they will need to interact with the real world.

That interaction might include buying goods and services with the money earned or even with the cash you may have collected.

The ATO has that covered, too.

It collects information from insurance providers who insure assets including caravans and motorhomes, motor vehicles, thoroughbred horses, fine art, boats and aircraft.

If you’ve just registered and insured a flash new jet ski, but only declared income of $50,000 on your tax return, a little notification probably just popped up in the ATO’s investigations unit.

And be careful if you think that running things offshore provides protection. The ATO has data sharing and tax treaty arrangements with almost every country on the planet.

On the basis that we provide financial information that allows them to properly tax their own taxpayers, they in turn share similar data with us.

Whether your name’s linked to a bank account in Chile, Kiribati or Iceland, the ATO probably knows about it.

In the past, crosschecking may have involved rooms full of cardigan-clad public servants, armed with pencils and mechanical calculators. In 2024, sophisticated computer software does all the work for them.

If you are a tax avoider — and with artificial Intelligence now added into the mix — things can only get worse.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association