The recent Centrelink debacle has thrown the spotlight on the extent of data matching by government agencies, and their capacity to get it wrong.
In the case of Centrelink, a simple arithmetic averaging of taxable income (info they got from the Tax Office) threw false income assumptions and debt collectors onto Centrelink beneficiaries who, quite correctly, had reported their income in the actual lumpy way it had been received.
So crude and obvious was the error, it has even led to a serious questioning of the government’s motives. Given the government’s budget-balancing objectives, was this just collateral damage from the effort to scare more money out of people?
Tax Office cross-checking of the data it collects has been going for many years, although not necessarily well-recognised by the average taxpayer. Once upon a time, it was just interest and dividend lists (and they were paper lists!) that the Tax Office got to look at and match up with what you wrote in your tax return. Even in those times errors were frequently made, for a variety of reasons not always within the Tax Office’s direct control.
These days the Tax Office has a large and ever-expanding assortment of electronic data sources obtained from private institutions and government agencies, state, federal and local. Additional data-matching programs and the time periods to which they relate are being gazetted on a regular basis.
The data-sharing between government agencies is not just one-way. The ATO shares data with state revenue agencies – there being a mutual interest in matching up rental revenue and property ownership for example – with land tax, capital gains tax and taxable income all pieces of the same puzzle. See: Airbnb land tax: Tasmanian couple fined for renting home, and this: Renting through Airbnb and Stayz poses capital gains tax risk for sellers.
The sharing economy has arisen quickly, and has been identified by the Tax Office as having special compliance risks. The sharing economy or “collaborative consumption” typically involves individuals engaging the use of their own assets or resources to earn income, with not much incentive to tell anyone about it. The Tax Office has developed a compliance response to the existence of the sharing economy and has issued a number of data-matching protocols targeting specific industry models.
A recent article in the online newspaper The Conversation highlights the issue in relation to Airbnb hosts – showing how mistaken revenue claims can easily made, and are hard to dispute. Added to the mix is the newness of Airbnb as a business model – there are some significant tax and factual issues to be worked through in order to decide whether a tax debt exists, and if so, the correct value.
The tax issues may be quite clear to the specialists, but to the average citizen it’s confusing, and following common sense doesn’t always provide the right answer. After all, small-scale private boarding arrangements have been going on for donkeys’ years, and precious few would have seen it as a business model deserving recognition in their tax returns. Read the full article here..Airbnb hosts beware – it’s not just Centrelink using robo-debt systems – The Conversation AU
Uber drivers (“ride-sourcing industry”) are also part of a particular business model which has arisen quickly, and like Airbnb house owners, has outed a personal asset (in this case a car) into the spotlight of taxable income. Initial disputes were over the applicability of GST, but the possibility of Uber-drivers also staying quiet about their income is clearly a concern of the Tax Office. The Tax Office has issued a specific data-matching protocol to target Uber drivers, having identified an estimated 74,000 drivers who may provide a “compliance risk”.
This transition of small private arrangements into fully taxable activities, the blurred lines of understanding for those involved, combined with fallibility of big-data has created potential difficulties for thousands of industry participants. These are typically individuals, unsophisticated business operators, and many of them part time, without a strong voice or organised representation.
The attention drawn by Centrelink’s most recent woes, not to mention (but we will) the seemingly ever-present myGov problems, along with the failure of computer systems at the Tax Office and the earlier 2016 Census embarrassment, once again confirms that not only are human beings fallible, but the computer systems they rely on are also. Perhaps the “good” which can come from these incidents, after all the post mortem reports are in, is a genuine attempt to describe and protect the rights, and rights of appeal, of citizens who find themselves at the mercy of self-serving algorithms.