Tax time 2018: Data doctors and their tests

UNDER THE MICROSCOPE: You may not realise, but your tax return is scrutinised by data doctors using high-tech systems and analytics. Photo: SHUTTERSTOCK
UNDER THE MICROSCOPE: You may not realise, but your tax return is scrutinised by data doctors using high-tech systems and analytics. Photo: SHUTTERSTOCK

The Australian Taxation Office (ATO), like many other organisations, continues to embrace the latest technologies, with the aim of ensuring wrongdoing doesn’t fly under the radar. 

The ATO has sophisticated technology and analytics which are run over every single tax return lodged. 

Data doctors – doctors in data science – are employed by the ATO to continually refine models which  can accurately identify those who make false or incorrect claims from those who aren’t.

“The reason we want to do that is to ensure we are not putting any additional impost on people who are doing the right thing,” ATO assistant commissioner Kath Anderson said.

And the data doctors are aided by the ATO’s access to a wealth of data – at least 650 million pieces of data which comes from a range of sources including single touch payroll (when an employer pays an employee’s salary they send data into the ATO) and sharing economy platforms (like Airbnb or Uber) and bitcoin platforms.

“What we do then is compare tax returns with the data we already have, and our analytics compare people in similar occupations earning similar incomes,” she said. “If a claim raises a red flag, we investigate further.

“This year we’ve reached more than one million taxpayers to support correct reporting and address non-compliance around work-related expenses, resulting in adjustments of more than $100 million.”