Blog | Investing tips

The Australian Tax Office, big data, and you

by Doug Morris, CEO, Sharesight | Nov 27th 2018

Right now I’m sitting in the Qantas lounge at the Melbourne airport and everyone is watching me.

Not literally. I’m just one of the many generic-looking guys working away on their laptops. But digitally, I’m bleeding out loads of information.

My travel itinerary and check in data has been fed into an algorithm that combined with my frequent flyer profile has ranked me in terms of how the airline will next market to me. My computer is connected to the Qantas wi-fi so in theory they could determine my age, interest, and income range.

You are a walking data generator, and this is potentially a future financial horror show.

Just as for-profit corporations like Qantas leverage this to "personalise" your experience, the Australian Tax Office has begun watching you too.

The Australian Tax Office, big data, and you

Recently the ATO and ASIC announced they will begin big data analysis on four year’s worth of DIY investor share trades to sniff out tax cheats. That equates to 500 million trades. Mine are in there, and so are yours.

Nothing is a secret, think about it.

You use a highly regulated bank and online broker to trade shares. Those shares are listed on the ASX - an institution so vital to the Australian economy that a 2011 merger with the Singapore exchange was scuttled for national security reasons. The ownership and dividend ledger is maintained by share registries - also publicly listed companies.

The information the ATO holds on you

In the words of ATO Assistant Commission Kath Anderson, "share information would complement records already held from brokers, share registries and exchanges."

That means they know everything. Except whether or not you were wearing pants when you made the trade (which assumes you have electrical tape on your computer camera of course).

Aside from institutional dark pools, there is no way to trades shares anonymously and it was only a matter of time before the ATO started mining the history. Our online broking partners have been telling us this for years.

Fortunately the ATO is being merciful. They’re giving investors the opportunity to correct genuine errors without incurring a penalty, including a 28 day period to respond in order to correct information.

They do state, however, that "shareholders are advised to keep good records of their purchases and sale prices, as well as the cost of brokerage fees. Where part of shareholdings are sold, records about the remaining shares should be maintained, required when calculating capital losses or gains."

That’s basically the opening sentence of the original Sharesight business plan.

How Sharesight helps you avoid the ATO’s trap

Sharesight enables investors to track their true performance, and provides reliable tax reporting. In order to do this, we ask investors build an accurate record of their investment history. Where imitators ask you to create a quick and dirty watchlists, we go the extra mile by recreating your cost base history, including corporate actions, and by factoring in dividends. It’s available anywhere via a browser, it’s always up to date, and we’re an independent company unlinked to any financial institution.

Retail Food Group Performance 2018

In the vast majority of cases, we estimate that investors run afoul of the ATO due to poor record-keeping. Our software works hard to help you build your investment history and track your trading activity on an on-going basis so you’ll never be out of line.

There is no better way to stay on top of your portfolio’s history than by using Sharesight. If you’re at all unsure about how to handle something, use our sharing feature to bring your accountant into the fold.

Our software is trusted by hundreds of thousands of investors and has been heavily tested by the the likes of PwC, Deloitte, and KPMG so they can use if for their clients.

Don’t fall into the ATO’s big data trap

The ATO is just one of many government departments getting in on big data. Almost anything that can be tracked these days, is tracked. If you’re doing something as common as share investing, it will pay to be organised with Sharesight and stay out of the crosshairs of the ATO’s big data program. Sign up for a free Sharesight account today!


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