The ATO’s new investment property loan data-matching program

Last week, the ATO released details about its new Residential investment property loan data-matching program for the 2021–22 to 2025–26 financial years. The ATO will acquire residential investment property loan (RIPL) data from financial institutions and use this information to identify individuals who may not be correctly reporting rental property interest deductions and net capital gains.

Why is the ATO conducting the data-matching program?

Sample audits across the ‘individuals (not in business’) population informed an estimate of the net tax gap for the 2019–20 financial year as being $9 billion, or 4.6 per cent.

A significant driver of the gap is the incorrect reporting of rental property income and expenses, with the net tax gap for rental property expenses contributing $1 billion, or 14 per cent of the total individuals gap. A common reason driving the incorrect reporting of rental expenses is individuals incorrectly apportioning loan interest costs where the loan was refinanced or redrawn for private purposes.

One of the ATO’s strategies to reduce the tax gap is to increase the quantity and quality of the data it collects.

What will the ATO use the data for?

RIPL data will be compared with claims a taxpayer makes in their rental property schedules and rental tax return labels. The ATO will use this data to identify, assess and treat several taxation risks, including:

• lodgment — confirming taxpayers with a rental property are lodging a tax return and their rental property schedule on or before the relevant due date
• income tax — confirming taxpayers with a rental property are correctly reporting interest on loan and borrowing expense deductions in their rental property schedules and associated income tax return labels
• CGT — confirming the calculation of cost base elements used to determine the net capital gain or loss on a rental property used to generate income.

The ATO will use the data to execute strategies to:

• identify relevant cases for compliance and educational activities
• inform rental property owners of their tax obligations
• avoid unnecessary contact with taxpayers who are correctly reporting and claiming rental property income or expenses.

Will the data be used to pre-fill tax returns?

RIPL data may be available to tax professionals through pre-filling reports in Online services for agents, and PLS through SBR.

The data may also be available to individual self-preparers through myTax, in particular the rental property schedule interest on loans and/or borrowing expense labels, and the rental income tax return label.

Who will provide the data?

Inclusion of a data provider is based on the a number of principles, including that the entity operates a business in Australia and provides residential investment property loans to individuals. The ATO has identified that it may obtain data from the following financial institutions and their subsidiaries:

• Adelaide Bank
• ANZ
• Bank of Melbourne
• Bank of Queensland
• Bank of South Australia
• Bendigo Bank
• Commonwealth Bank
• Bankwest
• ING
• Macquarie Bank
• ME Bank
• National Australia Bank
• RAMS
• St George
• Suncorp
• Ubank
• Westpac

Warning
The selection of a data provider is principles-based. A financial institution that is not listed above may be included at a later time. The ATO will review the data providers annually against the eligibility principles.

The ATO will obtain the data under its formal information gathering powers in the tax law. As this is a coercive power, data providers are obligated to furnish the requested information.

What data will be collected?

Data of residential investment property loans held by individuals will be collected from financial institutions. The collected data may contain all or a selection of the fields listed below.

Loan account holder details

• Unique client ID
• First name, middle and surname(s)
• Addresses (residential, postal)
• Australian business number (if applicable)
• Email address
• Contact phone numbers
• Date of birth

Loan account details

• Unique account ID
• Account number
• BSB
• Account name
• Loan type
• Loan commencement date
• Expected loan end date
• Term of the loan
• Opening balance (start of loan)
• Opening balance (start of financial year)
• Closing balance (end of financial year)
• Borrowing expenses

Property details

• Unique property ID
• Property address

Loan account transactions

• Unique account ID
• Transaction date
• Transaction type
• Transaction description
• Transaction amount
• Credit or debit

Note

The ATO expects to collect data on approximately 1.7 million individuals each financial year.

Further information and training sessions

See the ATO’s data-matching program protocol here.

See the Gazetted notice here.

See the protocol for the ATO’s property management data-matching program here — the ATO is collecting property management data for residential and commercial properties for the 2018–19 to the 2022–23 financial years.

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