Cash economy: Credit and debit card data matching

The Tax Office has recently provided information in relation to its credit and debit card data matching program designed to identify taxpayers who may be participating in the cash economy.

How data is collected

The Tax Office obtains data from banks that identifies credit and debit card sales made by Australian businesses. This data is matched against taxpayer records to identify those participating in the cash economy, and who are potentially skimming some or all of their cash takings or in other ways not reporting all of their income.

The credit and debit card data-matching program identifies transactions conducted for all merchants with a turnover of less than $10 million in the 2010-2011 financial year.

To date, the Tax Office has indicated that it has obtained data from the following banks:

• Commonwealth Bank of Australia
• St George Bank
• American Express Australia Limited
• Diners Club Australia
• Westpac Banking Corporation
• Australia and New Zealand Banking Group Limited
• National Australia Bank Limited
• Bendigo and Adelaide Bank Limited
• Bank of Queensland Limited, and
• BWA Merchant Services Pty Ltd.

How the data is used

The Tax Office uses bank data to improve compliance with tax obligations by:

• identifying businesses that:
  • are not reporting any or all of their income, or
  • may be running a part of their normal business activities off the books or operating underground by avoiding their obligations to register and lodge returns, and
• obtaining intelligence to increase its understanding of the behaviours and compliance profile of businesses in receipt of credit and debit card income, and to improve fraud detection models.

The Tax Office has indicated that those taxpayers identified as being at risk of potentially skimming some or all of their cash takings, running part of their business 'off-the-books', or in other ways not reporting all their income, should contact them to make a voluntary disclosure of any under-reported amounts.

In cases where businesses fail to comply with their obligations, even after being reminded of them, the Tax Office may take other appropriate action, including consideration for default assessments of a business's tax liabilities.