Income protection insurance data

Income protection insurance data overview

The data collected under this program will enable us to undertake a range of activities to support the correct reporting of IPI policy income and deductions in individual tax returns.

IPI data may be used for visualising to taxpayers and tax professionals through online services at, or before the time of lodgment.

The data may be available to:

• tax professionals through  
  • pre-filling reports in Online services for agents
  • Practitioner Lodgment Service (PLS) through Standard Business Reporting (SBR) enabled software
• individual self-preparers through myTax, specifically  
  • label 1 – Salary and wages, or label 24 – Other income (claims)
  • label D15 – Other deductions (premiums)

The data helps us:

• inform individuals with an IPI policy of their taxation obligations as part of an educative campaign including  
  • advisory educational emails and letters
  • social media
  • posters and toolkits on our website
• identify relevant cases for administrative action including compliance activities and educational strategies  
  • after you lodge a return, if we need to verify a discrepancy, we'll contact you by phone, letter or email
  • before we take any administrative action, you'll be able to verify the accuracy of the information we hold. You have 28 days to respond before we take administrative action associated with IPI data use
• avoid unnecessary contact with individuals who are correctly reporting and claiming IPI income and deductions
• make it easier for our clients to interact with the system and get their affairs right
• decide on whether new dedicated IPI labels should be added into individual income tax returns.

Previous related programs

This is a new data-matching program. Prior to publishing this data-matching protocol, we collected a sample of IPI data using our formal information gathering powers. Sample data was compared with tax returns. Assessment outcomes highlight that most taxpayers incorrectly reported their claims (income) and premiums (deductions). The data samples were found to be of a standard acceptable for the objectives of this data-matching program.

Data providers

We are the matching agency and, in most cases the sole user of the data obtained during this data-matching program.

We may obtain data from insurance companies and their subsidiaries, commonly known as the following:

• Zurich Australia Limited
• TAL Life Limited
• Resolution Life Australasia Limited
• MLC Limited
• AIA Australia Limited
• ClearView Life Assurance Limited
• NobleOak Life Limited

Eligibility as a data provider

We adopt a principles-based approach to ensure that our selection of data providers is fair and transparent.

Inclusion of a data provider is based on the following principles:

• Provider information allows us to materially increase (or sustain) our visibility of IPI policies within the Australian market.
• The cost to acquire data, and the cost incurred by the owner or custodian to extract the data, is collectively less than the value the data provides to address program objectives.
• The data owner or its subsidiary operates a business in Australia that is governed by Australian law.
• The data owner provides income protection insurance services.
• The data owner undertook these activities in the years in focus.

If the client base of a data provider does not present a risk, or the administrative or financial cost of collecting the data exceeds the benefit the data may provide, the data owner may be excluded from the program.

The data providers for this program will be reviewed annually against the eligibility principles.

Our formal information gathering powers

To ensure statutory requirements are met, we obtain data under our formal information gathering powers. These are contained in section 353-10 of Schedule 1 to the Taxation Administration Act 1953.

This is a coercive power, and data providers are obligated to provide the information requested.

We will use the data for tax and super compliance purposes.

Privacy Act

Data will only be used within the limits prescribed by Australian Privacy Principle 6 (APP6) contained in Schedule 1 of the Privacy Act and in particular:

• APP6.2(b) – the use of the information is required or authorised by an Australian law
• APP6.2(e) – the ATO reasonably believes that the use of the information is reasonably necessary for our enforcement-related activities.

Data elements we collect

Data pertaining to IPI policies, where the insured person is an individual, will be collected from insurance providers.

We negotiate with the selected data providers individually to obtain data held within their systems. The collected data may contain all or a selection of the fields listed below - this depends on what fields the data provider holds.

Policy holder identification details

Identification details include:

• unique identifier of the policy holder
• given and surnames (if more than one name on the policy)
• non-individual name (if applicable)
• dates of birth
• addresses (residential, postal, other)
• Australian business number (if applicable)
• email address
• contact phone numbers
• account name
• BSB
• account number.

Insured person identification details – individuals

Identification details include:

• unique identifier of the insured person
• given and surnames (if more than one name on the policy)
• dates of birth
• addresses (residential, postal, other)
• Australian business number (if applicable)
• email address
• contact phone numbers
• account name
• BSB
• account number.

Policy details

Policy details include:

• unique identifier for the policy
• financial year
• brand name (distribution entity)
• policy name
• policy type or category
• policy Product Disclosure Statement (PDS) number
• start date of cover
• end date of cover
• number of days covered in the financial year
• superannuation indicator
• total cost of premium in the financial year
• proportion of premium relating to income replacement
• proportion of premium not relating to income replacement
• total of any claim payouts in the financial year
• proportion of payouts relating to income replacement
• proportion of payouts not relating to income replacement
• bank account name for the policy
• bank account number for the policy
• bank account BSB for the policy.

Number of records

We expect to collect data on approximately 850,000 individuals each financial year for this program.

Data quality

We anticipate that the data quality will be of a high standard as evidenced by the sample data collected. Insurance companies have sophisticated computer systems, and they have prudential and due diligence obligations to maintain the quality of their records, especially for actuarial purposes.

Data retention

We collect data under this program for all financial years from 2021–22 to 2025–26. We collect this data annually following the end of each financial year.

Due to the number of data providers, we collect data periodically. We work with the data providers and aim to balance our requests against peaks and troughs of demand in a data provider's own business.

We destroy data that is no longer required in accordance with the Archives Act 1983, and the records authorities issued by the National Archives of Australia, for both general and ATO-specific data.

We retain each financial year’s data for 5 years from receipt of the final instalment of verified data files from the data providers. The data is required for this period for the protection of public revenue:

• Retaining data for 5 years enables us to generate iterative lodgment reviews, comparing lodgments with subsequent lodgments. This process can typically occur over multiple financial years.
• The data enhances our ability to identify taxpayers who may not be complying with their tax and super obligations, which is integral to the protecting the integrity of the tax and super systems.
• Retaining data for 5 years does not change our general compliance approach of reviewing an assessment within the standard period of review, which also aligns with the requirements for taxpayers to keep their records.
• The data is used in risk models, including models that establish retrospective profiles over multiple years aligned with period of review.
• It enables the ATO to conduct long term trend analysis of the IPI market and affected IPI labels in tax returns, subsequently refining risk assessment and treatment tactics.

While increased data retention periods may increase the risk to privacy, we have a range of safeguards to manage and minimise this. Our systems and controls are designed to ensure the privacy and security of the data we manage.