Australia

Details

  • Service: Tax
  • Industry: Financial Services
  • Type: Press release
  • Date: 11/03/2014

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New third-party data reporting regime could burden financial services industry 

Fund managers, brokers trading shares, merchant sale payment facility providers and individuals buying real estate transactions could be burdened by considerably more administration, KPMG has cautioned. A new reporting system due to apply by 1 July could also mean significant changes for  payment card providers - with a very tight timetable for implementation.

Jenny Clarke, KPMG Tax Partner, said: “This little-noticed Treasury paper on ‘third party reporting’ has potentially far-reaching implications for fund managers, brokers, financial service companies and property buyers.”

 

The government’s intention is to expand the ATO’s data-matching capabilities with third party information, ensuring taxpayers are correctly paying tax on sales of shares or units in unit trusts, merchant sales and property transactions.

 

The enhanced reporting is expected to raise an additional $610 million over the forward estimates period but this might come at a cost of increasing the burden on financial institutions and fund managers who already are burdened with current tax compliance reporting obligations such as FATCA, and information requests for ATO audit activities.

 

Whilst the enhanced third party reporting proposals appears to be consistent with the G20’s initiatives on enhanced transparency and reduce opportunities for tax evasion, it seems counter-intuitive to the government’s agenda of reducing the red tape burden on businesses.

 

Jenny Clarke said: “It will be important to strike the right balance between the incremental benefit of a new third party reporting system that enhances the information reported to the ATO to improve taxpayer compliance,and the additional costs imposed on business for implementing these systems to capture information the ATO wants.

 

“Will capturing information from merchant sales made via debit and credit payment cards enable the ATO to match the transactions of businesses that operate in the cash economy? Online payment facility systems provide an audit trail for debit and credit card transactions. However, transactions in cash may not be captured so there is a question of how the new third party reporting system will effectively capture this data”.

 

“All-round, we believe the 1 July 2014 implementation date seems too soon for people and businesses to be ready for this change.”

 

Comments on the Treasury’s paper are due in by 11 March 2014. The Treasury proposal paper can be found on the Treasury website.

 

Media enquiries

Ian Welch

Senior Communications Manager

KPMG in Australia

+61 2 9335 7765, 0400 818891

iwelch@kpmg.com.au

 

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