Accounting Tax Workpapers
15-Oct-2020 By - team

Is ATO able to see my bank account?

It's possible that someone has told you that the data matching technology developed by the ATO is now being utilised in Australia. This is because the Australian Taxation Office (ATO) has introduced a new system in an effort to identify taxpayers who have omitted or failed to declare income on their tax returns. This move creates a new window of opportunity for the ATO to expose tax evaders and collect additional revenue from Australians who may have understated their income.

If you put cash into your bank account, the Australian Taxation Office is more likely to conduct an audit of your financial records. Therefore, before you make any major financial deposits into your bank account, you should receive legal advice on your tax duties under the law. This should be done before you make any deposits of any kind.

If required, the ATO can and will get access to your bank records for the purposes of auditing your tax affairs. If you are under an ATO tax audit, you should contact King Lawyers immediately and get legal advice.

We receive data from a range of sources, including banks, financial institutions and other government agencies. We validate this data and match it against our own information to identify where people and businesses may not be reporting all their income.

We check your bank account information is up to date as part of our compliance program. We do this by comparing both: the bank information you told us. how much bank interest the Australian Taxation Office (ATO) tells us you got in past financial years.

Blog Verticle Cta Img
Get started today

Got questions? We have answers

03 9568 5444

It’s possible that you’ve come across one or more of the recent adverts for media freedom that have been released as part of the Your Right to Know campaign. For example, according to an advertisement that aired during prime time, the Australian Tax Office (ATO) has the ability to steal money from your bank account without your knowledge. The issue is, to what extent are you familiar with the authorities granted to the ATO?

The Australian Taxation Office (ATO) is widely recognised as one of the most powerful organisations in Australia due to its extensive and all-encompassing authority. In the most recent few years, the strategy that has been used has been to engage with taxpayers to ensure that the tax that they are responsible for paying gets paid. However, this degree of understanding is only going to endure for a limited time, and they will take action in cases in which taxpayers are unable to cooperate with them, regularly default on a payment plan that was agreed upon, or don’t take measures to rectify the matter (these steps include an expectation that you go into debt to clear your tax debt). In addition, there are situations in which the ATO has the authority to step in and seize assets like bank accounts if they feel there is a risk of the assets being sold or if there is a possibility that the taxpayer may flee the country.


Your Australian bank account has received suspicious cash deposits

Suppose you make cash deposits on a regular basis into your personal or corporate bank account in Australia. In that case, it is very necessary to get a lawyer’s counsel to ensure that you are appropriately complying with your requirements regarding taxation and record-keeping.

This is significant because the Australian Taxation Office (ATO) has the right to treat unexplained cash deposits in your bank account as income if they do not correspond to a legitimate business expense. In that case, you run the risk of being hit with a tax bill that is quite substantial in addition to being subject to harsh penalties from the ATO.

You cannot use the fact that you are unfamiliar with the tax regulations as a defence since it is not an acceptable excuse. You are the one who is responsible for ensuring that you are aware of and comply with all of the legal obligations that apply to you while in Australia. In the event that you are unsuccessful, you might expect a severe penalty from the Australian Taxation Office (ATO). In addition, the ATO may press criminal proceedings against you if they determine that the allegations made against you are of a sufficient seriousness. As a consequence of this, you should discuss this problem with an attorney as soon as possible because of the enormous relevance it carries.


Your Australian bank account statements are accessible to the ATO

The ATO is endowed with extensive legal authority, which allows it to access your personal bank information. Because of these capabilities, the ATO is able to get your Australian bank statements straight from your financial institution. As a result, the ATO may check and audit any cash that you have put into your bank account. This includes any cash that you have received as a gift.

Cloud Software Security


reporting to AUSTRAC all cash transactions worth $10,000 or more

The Australian Transaction Reports and Analysis Centre, often known as AUSTRAC, is a government agency in Australia that is responsible for monitoring financial transactions in order to detect instances of terrorist activity, money laundering, organised crime, tax evasion, and welfare fraud.

Within ten business days following the completion of any cash transaction totalling $10,000 or more, the details of that transaction are required to be notified to AUSTRAC. This includes cash deposits of 10,000 Australian dollars or more that you placed into your bank accounts in Australia or other financial institutions in Australia.

When conducting an audit, the Australian Taxation Office (ATO) can obtain access to any reports made to AUSTRAC about cash transactions of $10,000 or more. Because of this, the ATO has the authority to investigate and scrutinise each large monetary transaction that you have conducted in Australia.


Notifying AUSTRAC of suspected monetary transactions

Consider the following scenario: you make unexplained cash deposits into your bank account, and the financial institution has grounds to suspect that you are doing so in order to evade taxes or commit another type of crime. If this is the case, the bank is obligated to notify AUSTRAC of the suspicious bank deposits within three business days of the bank becoming suspicious of the deposits.

For instance, if you regularly deposit cash into your bank account in the amount of $9,000, your financial institution is likely to continue to report those transactions to AUSTRAC as suspicious cash transactions, despite each transfer being less than the threshold amount of $10,000.


Unexpected cash deposits in your accounts at foreign banks

If you are an Australian resident for tax reasons, you are required to report and pay income tax to the Australian Taxation Office (ATO) on any income you get from anywhere in the world. Because of this, any cash that you put into an overseas bank account might potentially be relevant to your tax responsibilities to the Australian Taxation Office (ATO).

Imagine that you are required to voluntarily give information to the ATO on your unaccounted-for foreign income or cash deposits made in overseas bank accounts. In that instance, you should seek the counsel of an experienced tax lawyer and move swiftly in order to avoid being subjected to an audit by the ATO. This is due to the possibility that you will be penalised by the ATO for neglecting to submit a voluntary disclosure. In addition, if you don’t find a solution to the problem, the Australian Taxation Office (ATO) will start an audit of your tax affairs, which will unquestionably result in dramatically greater penalties.


Your information about overseas banks is accessible to the ATO

Your foreign bank and the ATO will be required to engage in an automated exchange of financial account information per the Common Reporting Standard (CRS), a new legislative obligation. On July 1, 2017, the newly enacted legislation began to take effect. In 2018, there was the initial sharing of information between both parties.


Your foreign bank is obligated to provide the following information to the Australian Taxation Office (ATO) on your overseas bank account in accordance with the CRS.

  • Name\sAddress
  • Number Identifiant du Payeur (I.D. du Payeur) (TIN)
  • When and where you were born, please.
  • Number of accounts
  • Please include the name of the reporting financial institution as well as the identification number.
  • The amount remaining in a bank account or its worth as of the end of the applicable calendar year (or another appropriate reporting period)
  • Information on any accounts that were closed during the applicable calendar year (or another appropriate reporting period)
  • Depending on the kind of account, details on dividends, interest, capital gains, and other financial events are provided.


Consider the possibility that there is some inconsistency between the information about your foreign income that has been submitted to the ATO by your foreign bank and the information about your foreign income that you have personally disclosed to the ATO. If this is the case, the Australian Taxation Office (ATO) may investigate the disparity by auditing your tax affairs. If there is any discrepancy between the information that was submitted to the ATO by your overseas bank and the information that you personally provided to the ATO, then this is the situation that you will find yourself in.


Disclosure to the Australian Taxation Office (ATO) of unexplained monetary deposits made on a voluntary basis

Suppose there is cash that has been deposited into your bank accounts that you are unable to account for. In that case, you should seek the advice of an attorney regarding making a voluntary disclosure to the ATO about your tax affairs. You should also address any tax issues as quickly as possible in order to avoid an official audit by the ATO. Because of this, you should have the greatest possible outcome with the ATO, and the severe fines should be reduced.

You will only have one chance to take part in the voluntary dialogue that will be presented to you. As a consequence of this, getting it right is absolutely necessary, and it would be in your best benefit to collaborate with a tax attorney who has prior experience writing and submitting voluntary disclosures to the ATO. This would be in your best interest.


ATO’s determination of fraud or tax evasion

There is no time limit or restriction on how far back in time the ATO may audit you if it determines that you engaged in fraud or tax evasion as a result of illogical cash deposits in your bank account. This indicates that the ATO may look into you for as long as necessary. For instance, the ATO may look into all of your tax-related financial activities from the previous ten or twenty years and then send you a very large tax bill.

If you want to keep yourself out of a scenario like that, you should consult a lawyer about your tax issues and ensure that you abide by all Australian tax laws that are relevant to you.

In this day and age of cutting edge technology, you cannot escape the Internal Revenue Service; they are keeping track of every dollar you earn and spend.

The Australian Taxation Office (ATO) is now able to match the tax returns submitted by Australians with personal data obtained from banks, employers, and other institutions. This allows the ATO to determine whether or not Australians have underreported their expenses and whether or not they have underreported their income.

There has been an uptick in the number of complaints lodged by taxpayers and small businesses that may not be declaring all of their revenue, in particular those that are suspected of operating cash systems, since the new data-matching system that was introduced in an effort to reduce tax evasion was put into place.


How does it work?

The process of matching the new external data that it obtains with the records that it already has is carried out by the Tax Office in two stages.

The first step in the process involves the ATO retrieving data from your bank as well as other financial institutions, including accounts held in foreign banks. Additionally, it compiles information from sources such as health insurance funds, company activity statements, retirement accounts, and state property information. And more recently, the Australian Taxation Office has expanded its operations overseas and has begun connecting data about Australians with bank accounts held outside of Australia that also generate interest.

After that, a comparison is made between this information and the data submitted on a tax return. The Tax Office will be aware if there is income that has not been disclosed or if there is something that does not correspond, and they will then initiate an audit enquiry.

Laweyer Professional Services


How can you make sure you, or your business, are in the clear?

We have created a list of suggestions on how to stay on good terms with the ATO, and they are as follows:


Stay on the books

Never take up a monetary job without first telling anybody about it. Because the ATO has access to the bank data of both you and your employer, in addition to almost any other data it would want, it will be aware of any deposits, super contributions, withdrawals, and interest you earn.

Make certain that everything is “on the books” and that it is included in the income that is reported on your tax return. The Australian Taxation Office will compare the information in your bank account with your ABN and note any income omitted from your tax return.


Declare overseas cash

If you have a bank account in a foreign country, you must report any interest you receive. In 2016, it was probable that the ATO will pay special attention to any Australians who are not disclosing their income from foreign accounts on their tax return. This is because the ATO is cracking down on people who are trying to avoid paying taxes.


Freelance is not (tax) free

You are not excused from disclosing your income if you have supplementary sources of revenue such as renting out your accommodation on Airbnb, driving for Uber, or performing freelance services. Do not make the mistake of believing that the expanding sharing economy sector is flying under the radar just because it is still in its infancy. This is a trap that you should avoid falling into. It is not that.


Keep property income on the level

Ensure that you accurately disclose your property’s revenue and don’t overstate the amount of deductions you took. The Australian Taxation Office (ATO) is now conducting an investigation into property transactions that took place between 1985 and 2017 to determine whether or not they comply with applicable tax regulations.


Which bank(s)?

At this time, the following financial institutions will be contacted and requested to share information regarding their respective customers:

  • Limited Partnership of the Australia and New Zealand Banking Group (“ANZ”)
  • The Australian subsidiary of the Bank of China
  • The People’s Bank of China, Limited.
  • Credit Suisse AG
  • Deutsche Bank Aktiengessellschaft
  • Limited by Shares of HSBC Bank Australia
  • Hongkong and Shanghai Banking Corporation Limited
  • The Limited Liability Company of Investec Bank (Australia)
  • The Company of Macquarie Bank Limited
  • The Australian subsidiary of Rabobank
  • Rabobank Nederland UBS AG
  • Citibank, National Association as well, as Citigroup Pty Limited


(Did you just let out a breath of relief when you didn’t notice your bank, which is the most common financial institution utilised by those who have business dealings across international borders? Please don’t be under the impression that the ATO won’t take an interest in you or your business simply due to the fact that your bank isn’t currently included on this list. The ATO participates in a wide variety of activities in order to collect data. Even though your financial institution isn’t taking part in this particular one, it doesn’t mean they haven’t been requested for information in the past or that they won’t be able to participate in the future!


How will they use the data they have collected?

The information that they collect from the banks will be electronically linked with the various data that the ATO now stores in order to determine whether or not there is any non-compliance.

The ATO has said that the goals of the initiative, which is known as the Banking Transparency Strategy, are as follows:

  • Help the ATO in gaining a better understanding of the behaviour of taxpayers in regards to international transactions, work on compliance profiles, and improve fraud detection models.
  • Find taxpayers who are not declaring all of the money they have earned and penalise them accordingly.
  • Locate Australian resident taxpayers who may be avoiding paying their taxes and work to bring them into compliance with the law.
  • Increase the transparency of the transactions that Australian residents carry out anywhere in the globe.
  • Contribute to the development and implementation of administrative initiatives to increase voluntary compliance through activities including education, auditing, enforcement of lodging requirements, and debt collection
  • Encourage compliance on a voluntary basis and work to build community faith in the honesty of the tax system.


The ATO has the following authority to ensure that unpaid taxes are collected:

  • Send a notice of garnishment to the individual or institution, like a bank, that is holding money on your behalf. This is necessary in order to proceed with the garnishment. Imagine that you are an employee who is paid an established wage or salary. If this is the case, the ATO has the authority to request that a portion of your compensation be withheld by your employer and then sent to them as a payment towards your tax liability until it is satisfied. This is often limited to a maximum of thirty percent of your annual pay in the majority of situations. If you owe money to the Australian Taxation Office (ATO), they have the ability to access your merchant facility, which means that if you operate a business, this applies to you.
  • Notice of Director Penalty Directors are individually liable for fines that are equivalent to their company’s outstanding PAYG withholding liabilities or superannuation guarantee fee if those liabilities go unfulfilled. The government has also expressed interest in extending this provision to include outstanding GST obligations. If this debt is not settled, the ATO may issue a director penalty notice to initiate legal action (and withhold any refunds due to the director).
  • If an employer receives a direction to pay superannuation guarantee, the Superannuation Guarantee Charge must be paid in full within the term that is mentioned if there is a balance that is owed to the government. It is a criminal offence to violate this notification, and if you are found guilty of this crime, you might face serious penalties and/or time in jail. If you are found guilty, you will be held accountable.
  • Put an end to it by issuing a freezing order, for example, on your bank accounts so that the money cannot be accessed. To put it another way, the ATO has the ability to quickly freeze your accounts and then, if necessary, to close them completely, and this is especially true if they have cause to believe that you have other sources of income. This order to freeze assets, on the other hand, cannot be issued by the ATO on its own; rather, it is something that needs to be authorised by a judge.
  • Issue writs, warrants of execution, or warrants of seizure and sale, whatever appears most appropriate in the circumstances. For instance, they have the authority to compel you to sell particular assets in order to meet your tax obligations. This power is given to them by the government.
  • The winding-up process involves either liquidating your firm or declaring bankruptcy. The majority of taxpayers are sceptical regarding the severity of the actions that the ATO will take. However, before any issue is resolved, the ATO has the authority to initiate the winding-up process. During the 2017–2018 fiscal year, the ATO declared 470 taxpayers insolvent and closed down 1,282 companies. The ATO would respond that the winding-up process, in many instances, only expedites what was always going to happen and stops more debt from being accrued either to the ATO or to other parties.


The takeaway from this is to ensure that you are on top of all of your documentation at all times. In addition, you need to be ready to answer in the event that the ATO has questions or detects that anything is not correct. The matter will only become more serious if you drag it out or if you don’t produce any proof.

Is it possible for the ATO to remove funds from your account without providing you with prior notice? Absolutely, and there is a great deal more to it if you have the backing of the courts.

Talk to your tax agent and have them contact the ATO on your behalf to arrange a payment plan if you’re having trouble staying on top of your payments. We always recommend you do this if you’re having trouble keeping up with your obligations.


Keep your duties in mind

We would like to take advantage of this opportunity to once again remind all of our customers that if they are Australian resident taxpayers, they are obligated to report any and all income that they earn (or have some entitlement to, whether directly or indirectly) from any country in the world. This obligation applies regardless of whether the income was earned in Australia or elsewhere in the world. This obligation exists regardless of the manner in which the revenue was obtained, be it directly or indirectly. Similarly, let’s say you have assets that are situated in a country other than Australia, and you control those assets either directly or indirectly. If this is the case, then it is customarily required of you to disclose the presence of such assets within your tax return. Even if the assets don’t bring in any money for you, you still have to pay taxes on them (even if there is no current tax to pay them).

Since March of this year, the Australian Taxation Office (ATO) has been running a programme called “Project DO IT: disclose offshore income today.” Under this programme, taxpayers are encouraged to come forwards and voluntarily disclose any unreported foreign income and assets in exchange for a number of benefits, including the chance to avoid steep penalties and the possibility of criminal prosecution for tax avoidance.


Guest post by : team Form -

Like this? Share it...