Many people picture a tax return being checked by a person with a pen. Today, much of the checking is done by data, and it starts before the return is even lodged.
More than 600 million transactions a year
According to the ATO, more than 600 million transactions are reported to it each year by third parties. Its sources include:
- banks and financial institutions (interest and investment income)
- employers (payments to employees and contractors)
- share registries and stock exchanges (share sales)
- state title offices (property sales)
- motor vehicle registries (vehicles sold, transferred or newly registered)
- online selling platforms and sharing economy platforms (sales and payments)
- banks providing merchant facilities (card payments received by businesses)
- cryptocurrency exchanges (purchases and sales)
- overseas tax authorities (foreign income).
Much of this information is used to pre-fill tax returns.
When the checking happens
The ATO says it runs its data-matching programs throughout the year, including when a return is lodged and after the assessment has been issued. If a return differs from the pre-filled information, the difference can be picked up at either point.
The ATO also uses machine learning to spot claims that look unusual compared with similar taxpayers. In some cases, this means a prompt to check a claim before the return is lodged.
A check is not an accusation
The ATO is clear on this point: "If we check your information, it doesn't automatically mean we think you're dishonest in your tax affairs." Where the data doesn't match, the ATO may make contact to find out why, and provide the details of the information it holds.
The common mistakes
According to the ATO, common errors include:
- leaving out income, such as from a second job, cash work, a side business, online selling or bank interest
- work-related expense claims that are incorrect
- relying on tax information from friends, social media or AI tools that wasn't written for the person's circumstances.
Who prepares the return matters
The ATO has also raised concerns about unregistered tax preparers. It has said that this tax time it stopped more than 10,000 returns suspected of being prepared by unregistered preparers, involving over $170 million in deduction claims. According to the ATO, people who use unregistered preparers may lose the protections that come with using a registered tax professional.
Registered tax agents can be checked on the Tax Practitioners Board's public register.
Sources
- Australian Taxation Office, Data matching, last updated 21 October 2025 – ato.gov.au
- Australian Taxation Office, comments by Assistant Commissioner Anita Challen, October 2026
- Tax Practitioners Board, public register – tpb.gov.au
This article is general information only. It doesn't take into account your personal circumstances and isn't financial product advice. Please speak with us before acting on anything here.
