Notifying the public of the data-matching program

Gazette notice: Commissioner of Taxation – Notice of a crypto asset data-matching program - 22 April 2024

The Australian Taxation Office (ATO) will acquire account identification and transaction data from crypto designated service providers for the 2023-24 financial year through to the 2025-26 financial year inclusively.

The data items include:

• client identification details (names, addresses, date of birth, phone numbers, social media account and email addresses)
• transaction details (bank account details, wallet addresses, transaction dates, transaction time, transaction type, deposits, withdrawals, transaction quantities and coin type).

We estimate that records relating to approximately 700,000 to 1,200,000 individuals and entities will be obtained each financial year.

The data will be acquired and matched to ATO systems to identify and treat clients who failed to report a disposal of crypto assets in their income tax return. The matching process strengthens our ability to develop tailored treatments for clients who may not be meeting their obligations. These may include registration, lodgment, reporting and payment obligations.

The objectives of this program are to:

• promote voluntary compliance by communicating how we use external data with our own to help encourage taxpayers to comply with their tax and superannuation obligations.
• identify and educate those individuals and businesses that may be failing to meet their registration and/or lodgment obligations and assist them to comply.
• gain insights from the data that may help to develop and implement treatment strategies to improve voluntary compliance; this may include educational or compliance activities as appropriate.
• gain insights from the data to increase our understanding of the behaviours and compliance profiles of individuals and businesses that have bought, sold or accepted payment via crypto assets.
• help ensure individuals and businesses that trade or accept crypto assets as payment are fulfilling their tax lodgment, reporting and payment obligations.

A document describing this program is available at ato.gov.au/dmprotocols

This program follows the Office of the Australian Information Commissioner’s Guidelines on data matching in Australian Government administration (2014) (the guidelines). The guidelines include standards for the use of data matching as an administrative tool in a way that:

• complies with the Australian Privacy Principles (APPs) and the Privacy Act 1988 (Privacy Act)
• is consistent with good privacy practice.

A full copy of the ATO’s privacy policy can be accessed at ato.gov.au/privacy

10.2.a

The effect that not abiding by the Guidelines would have on individual privacy

We have in place very secure processes for handling and storing data. Once acquired, all data will be stored on our secure computer systems where access is strictly controlled, and full audit logs maintained.

We and our staff operate under stringent confidentiality and privacy legislation that prohibits the improper access to or disclosure of protected information. These obligations are supported by significant penalties, including imprisonment. This provides a significant deterrent and substantially reduces the likelihood of breaches of privacy.

10.2.b

The seriousness of the administrative or enforcement action that may flow from a match obtained through the data-matching program

When we propose to take administrative action where a taxpayer may have reported incorrectly, we will differentiate between those that try to do the right thing and those that set out to deliberately avoid their obligations. Documented procedures, including the Taxpayers’ Charter and compliance model will be followed to ensure fairness and consistency.

10.2.c

The effect that not abiding by the Guidelines would have on the fairness of the data-matching program – including its effect on the ability of individuals to determine the basis of decisions that affect them, and their ability to dispute those decisions

There will be no effect on the fairness of the program or the ability of taxpayers to find out the basis of decisions that impact them or their ability to dispute those decisions.

Before any administrative action is undertaken, taxpayers will be given at least 28 days to verify the accuracy of the information that has been derived from this data-matching program.

Where administrative action is to be undertaken, we will adhere to the principles established in the Taxpayers’ Charter and compliance model to ensure an equitable and consistent approach is taken.

If a taxpayer does not agree with an assessment, they maintain the right to dispute the decision. They also have the legal right to appeal against the decision through the courts and tribunals.

10.2.d

The effect that not abiding by the Guidelines would have on the transparency and accountability of agency and government operations

There will be no adverse effects on the transparency and accountability of government operations by not directly naming data suppliers.

ATO data matching is conducted to address identified compliance risks in a segment. A comprehensive description of the data providers operating in the identified segment is included in the program protocol. The description also identifies the principles and criteria for selecting the data providers. Our practice is to raise awareness of the risk in the segment and ensure all participants are made aware of their obligations and impacts when engaging in that segment.

The program protocol is submitted to the Office of the Australian Information Commissioner and we will strictly adhere to the commitments in that document.

We will publish a notice with general information about the program in the Federal Register of Legislation – Gazettes before administrative action commences. We will also make a copy of the program protocol available on our website.

10.2.e

The effect that not abiding by the Guidelines would have on compliance of the proposed data-matching program with the Australian Privacy Principles in the Privacy Act 1988 and the Australian Government Privacy Code

The data is collected for the stated objectives established in the data-matching program protocol.

10.2.f

The effect that complying with the Guidelines would have on the effectiveness of the proposed data-matching program

The effectiveness of the program would be reduced if source entities had to be identified. Their willingness to participate and cooperate with us would likely be compromised.

10.2.g

Whether complying fully with the Guidelines could jeopardise or endanger the life or physical safety of information providers or could compromise the source of information provided in confidence

Not abiding by all the requirements of the Guidelines would not influence or affect the personal safety of any individual identified as part of the program or compromise the source of the information provided in confidence.

10.2.h

The effect that complying fully with the Guidelines would have on public revenue – including tax revenue, personal benefit payments, debts to the Commonwealth and fraud against the Commonwealth

Not allowing the exemption under the current program may cause us to miss potential breaches of tax laws and subsequent non-payment of tax. This would result in the Commonwealth foregoing tax revenue.

There are risks to the integrity of the tax system when people fail to comply with their obligations. Abiding by all the requirements of the Guidelines will reduce the effectiveness of the proposed compliance activity. We would miss the opportunity to educate those taxpayers trying to do the right thing and deter those that are non-compliant from repeating the behaviour.

The effect of abiding by all of the requirements in the Guidelines could negatively impact both public revenue and the confidence the public and government have in the ATO as an administrator of the tax system. People not complying with their tax obligations, including those operating outside the system, set a bad example to compliant taxpayers and may encourage their non-compliance. Maintaining community and government confidence in the tax system is critical to our ongoing role.

10.2.i

Whether complying fully with the Guidelines would involve the release of a document that would be an exempt document under the Freedom of Information Act 1982

Upon receipt of a freedom of information request only information relating to the taxpayer’s own affairs will be released to the taxpayer concerned.

10.2.j

Any legal authority for, or any legal obligation that requires, the conduct of the proposed data-matching program in a way that is inconsistent with the Guidelines.

There is no specific legislative power authorising the conduct of this program inconsistent with the Guidelines.

The Commissioner of Taxation, or his authorised representative, has formed the opinion this data is required to enable us to effectively and efficiently carry out our legislated functions under the general powers of administration contained in:

• Section 3A of the Taxation Administration Act 1953
• Section 8 of the Income Tax Assessment Act 1936
• Section 1-7 of the Income Tax Assessment Act 1997
• Section 356-5 in Schedule 1 of the Taxation Administration Act 1953

The reasons for proposing to operate outside requirements of the Guidelines are detailed above.

Paragraph 6

Status of the Guidelines

Our commitment to complying with the Guidelines is embedded in our data management policies and principles and clearly stated in the chief executive instruction.

Guideline 1

Application of the Guidelines

We apply the Guidelines for all data-matching programs where it is anticipated the program will include records of 5,000 or more individuals.

We recognise that programs where there are multiple data sources but with common objectives and algorithms are treated as a single data-matching program.

Guideline 2

Deciding to carry out or participate in a data-matching program

Cost-benefit analysis considers alternate methods against the conduct of a data-matching program.

We have rigorous governance arrangements, processes and system controls in place to protect the privacy of individuals.

Guideline 3

Prepare a program protocol

Prior to conducting a data-matching program, we prepare a data-matching program protocol, submit this to the Office of the Australian Information Commissioner and make a copy publicly available on our website.

When elements of a data-matching program change, the protocol is amended, a copy of the amended protocol is provided to the Office of the Australian Information Commissioner and updated on our website.

Guideline 4

Prepare a technical standards report

Documentation is prepared and maintained to satisfy the requirements of a technical standards report.

Guideline 5

Notify the public

We publish notification of our intention to undertake a data-matching program in the Federal Register of Legislation – Gazettes prior to the commencement of the program.

This notice will include the following information as required by the Guidelines:

• a brief description of the objectives of the data-matching program
• the matching agency and (where appropriate) source entities involved in the data-matching program
• a description of the data contained in the data set involved in the data-matching program
• the categories of individuals about whom personal information is to be matched
• the approximate number of individuals affected
• reference to our privacy policy.

Notification of the program is also published on our website and data providers are advised they can advertise their participation in the data-matching program.

Guideline 6

Notify individuals of proposed administrative action

Prior to taking any administrative action as a result of the data-matching programs, individuals and other entities are given at least 28 days to verify the accuracy of the information provided to us by third parties.

Guideline 7

Destroy information that is no longer required

We regularly review our requirement to continue to retain data and destroy those datasets no longer reasonably necessary.

Guideline 8

Don't create new registers, data sets or databases

We don't create new registers or databases using data obtained during a data-matching program.

Guideline 9

Regularly evaluate data-matching programs

Programs are evaluated within 3 years of the commencement of the data-matching program. These evaluations are provided to the Office of the Australian Information Commissioner on request.

Guideline 10

Seeking exemptions from Guideline requirements

When we intend to vary from the requirements of the Guidelines, we seek the approval of the Office of the Australian Information Commissioner and provide documentation to support the variance.

Guideline 11

Data matching with entities other than agencies

We undertake our own data-matching programs. This function isn't outsourced.

Where data is obtained from an entity other than an individual, we usually do so by using our formal information gathering powers. In these instances, the entities are advised they may notify their clients of their participation in the data-matching program.

Guideline 12

Data matching with exempt agencies

We don't usually undertake data matching with agencies that are exempt from the operations of the Privacy Act 1988 under section 7 of that Act and that are subject to the operation of the Guidelines (e.g. any data matching undertaken with an exempt agency would usually be for fewer than 5,000 individuals).

In the event a data-matching activity would otherwise be subject to these Guidelines except for the exemption status, we still adhere to the principles of the Guidelines and prepare a program protocol, seeking to vary from the Guidelines by not publicly notifying of the program and publishing the protocol. We would still lodge a copy of the protocol with the Office of the Australian Information Commissioner.

Guideline 13

Enable review by the Office of the Australian Information Commissioner

We wouldn't prevent the Office of the Australian Information Commissioner from reviewing our data matching activities and processes. These activities and processes have been reviewed by the Australian National Audit Office and Inspector-General of Taxation.