Why the ATO’s growing access to private data should have a limit
By Nicole Kelly (pictured), Founder and CEO of TaxTank
This year, more than ever, the ATO is giving taxpayers good reason to be anxious about their tax returns. Not only is the ATO continuing to increase its scrutiny of taxpayers and increase fines for late submissions, but their growing use of Artificial Intelligence (AI) and expanded data-matching program means there is no room for error. Things that were once considered invasions of privacy, such as accessing someone’s financial records or Medicare claims, are now part of the ATO’s day to day operations in their ongoing hunt to catch taxpayers who are supposedly trying to cheat the system.
While the ATO continues to claim that Australians are intentionally misleading the tax system, it often overlooks the honest taxpayers who struggle with its complexity. The ATO champions its MyTax service as a tool to simplify tax returns and help Australians make better tax choices, using real-time analytics to prompt taxpayers to review their figures when claims deviate from expected norms. During the 2020 tax season, nearly 340,000 MyTax users received such prompts, resulting in adjustments with an estimated revenue impact of around $37 million. Despite 5.5 million Australians using the portal, its cumbersome nature and high error rate underscore the urgent need for more user-friendly solutions.
Consequently, as taxpayers and accountants start to gather receipts, expense claims, and income records for the EOFY season, we should also be asking ourselves and the government agencies designed to support us at this time of year, “What are the limits of the ATO’s access to our private data and what are the benefits to this invasion of personal privacy?”
Turning a blind eye to privacy
Sharing personal information, such as your name, address, or credit card details with another organisation is now a regular occurrence for many Australians. This is largely due to the normalisation of sharing personal information with social media, ecommerce, and government services’ online platforms. Privacy advocates are pushing for reforms to the outdated Privacy Act, though are challenged with the “privacy paradox” of people being worried about their privacy and yet not acting on those concerns.
Unfortunately, the ATO is taking advantage of this lethargy.
Increasing data access with Digital ID
While reviewing the Privacy Act is ongoing, the government is simultaneously looking at implementing a Digital ID for all Australians and has allocated $288 million in funding for the rollout, $23.4 million of which will be for the ATO, Finance and Services Australia over two years. There is ongoing debate regarding whether the Digital ID rollout should wait until the Privacy Act is updated, to ensure it aligns with modern privacy standards, and there are experts across the legal and security industries calling out the privacy concerns of a digital identification for every Australian that is solely managed by the government.
If the government were to have access to taxpayers’ entire digital identification records for the purpose of ensuring tax returns and financial claims were legitimate and fair, it would only be fair that a comparable investment is made into protecting the privacy and security of taxpayers being forced to hand over this information. The ATO recently admitted it handles over four million cyber attacks each month, yet there is little insight into whether the vast amount of personal information Australians are already sharing with the ATO are under threat and, if so, to what extent.
The sky should not be the limit
Every year the ATO announces the various groups of taxpayers they will be ‘cracking down’ on, and every year their powers and access to private data increases. As the tax ecosystem is already convoluting for many, Australians and Australian businesses deserve better. We deserve a government that invests simultaneously in education for taxpayers about an otherwise overwhelming tax system, security for our growing volume of digital financial data, and tools for a digital-first tax ecosystem.
Rather than continuing to encroach on Australians’ privacy year after year, the ATO has an opportunity to collaborate with the private sector, from fintechs to major accounting firms, to help Australians understand their tax obligations and contribute fairly to our economy.
