Australian ­Taxation Office turns to Facebook to catch cheats

Social media posts, private school records and immigration data are being used by the Australian Taxation Office as part of an increasingly sophisticated crackdown on tax cheats that yielded nearly $10 billion last year.

ATO Commissioner Chris Jordan said the tax office had been investing in data collection analysis of social media platforms such as Facebook to find cases of people’s declared income not matching their lifestyles, and then pursuing recovery of the unpaid taxes.

The crackdown has netted dozens of examples of undeclared foreign income being used to pay private school fees or overseas travel that is not in line with taxpayers’ declared income.

“It’s also a reality of the age we live in that there is more and more information publicly available, particularly through social media,’’ Mr Jordan told The Australian.

“Of course we’ll never go looking for this information where people are doing the right thing and are open with us. We only go looking when something just doesn’t add up.”

The data-matching push is part of ATO efforts to fill the multi-billion-dollar gap between the tax that would be paid if all income was declared and the actual amount collected from individual taxpayers, which was $187.1bn in 2015-16.

According to the ATO annual report released this month, the tax office collected $9.6bn from so-called compliance activities last year, of which more than two-thirds was income tax.

“Lots of little amounts add up to a lot,’’ Mr Jordan said.

“We need to continue to support those who do the right thing, and identify and take action against those who choose not to.”
He gave an example of a family where the husband had a business and reported $80,000 of taxable income — putting him just inside the second-lowest tax bracket — and his wife earned $60,000.

But data matching revealed the family had three children at private schools at an estimated cost of $75,000, while immigration records and social media posts showed the family had recently taken five business-class flights and a holiday in the Canadian ski resort of Whistler.

“If our intelligence from immigration shows that the family of five flew business class three times in the last few years, and their social media posts show photos of the family on a ski holiday in Whistler, this will prompt us to contact them to ask more questions,’’ Mr Jordan said.

“People say ‘well how do you know about that?’ They can’t dispute it because the kids are at that school and a lot of it is public information.”
The ATO collects information from a range of public and private sources including motor registries, the stock exchange and online selling platforms, while banks, employers, health insurers and government agencies are obliged to report information to the taxman.

But the ATO has been casting its net wider, last year writing to 60 private schools seeking the source of payment for school fees they collected and identifying 100 families using undeclared offshore accounts.

Mr Jordan, a former policeman and accounting firm auditor, has led a major overhaul of the ATO, including thousands of job cuts and a co-ordinated international push to reduce tax avoidance with new legislation targeting multinational companies and information-sharing with tax authorities in other countries.

In the annual report, Mr Jordan warned that “our tolerance, and that of the community’s, for game-playing and tax avoidance has dropped considerably”, and that the ATO would take a hard line with tax avoiders.

A crackdown on international structures and profit-shifting by multinational companies has raised $1.2bn since 2013 and the ATO’s powers have been boosted by “multinational anti-avoidance” legislation introduced last year.

The government has given the ATO $679 million for a new tax-avoidance taskforce led by Mr Jordan and tasked with raising $3.7bn by 2020 from multinationals that shift Australia earned income to low-tax jurisdictions.

The ATO led international collaboration efforts to deal with a massive data leak from accounting firm Mossack Fonseca that revealed widespread use of tax havens by companies and wealthy individuals.