For most of us, preparing a tax return involves gathering information about the year just finished.

Income. Interest. Investments. Rental properties. Deductions. Maybe the sale of an asset.

But while you’re gathering that information, the ATO has been gathering information too.

The days when the ATO only knew what you told them in your tax return are long gone.

Today, information flows to the ATO from employers, banks, government agencies, investment bodies and a growing range of other sources.

That isn’t necessarily something taxpayers should be worried about. But it is something they should understand.

Some of your tax return may already be filled in

The most familiar example is pre-fill information.

By the time many individuals prepare their tax return, the ATO may already have information about salary and wages, bank interest, dividends, private health insurance and other items.

That makes preparing a return easier.

But pre-fill isn’t the same thing as a completed tax return.

Information may be incomplete, may arrive at different times or may still need to be checked against your own records. And there are plenty of transactions and deductions the ATO cannot determine simply from information reported by somebody else.

Ultimately, taxpayers remain responsible for the accuracy of their return.

The ATO also matches information

Beyond pre-fill, the ATO operates a range of data-matching programs.

These allow information from third parties to be compared with amounts reported, or sometimes not reported, in tax returns.

Depending on the circumstances, data available to the ATO can relate to areas such as property transactions, investments, cryptocurrency, sharing-economy activities and other financial transactions.

The purpose isn’t simply to find mistakes after a return has been lodged.

Data is increasingly used to identify inconsistencies, understand taxpayer behaviour and help the ATO determine where closer attention may be required.

Property is a good example

Consider an investment property.

There can be information available from several different sources relating to the ownership, purchase and sale of property.

But knowing that somebody owns a rental property doesn’t tell the ATO everything required to prepare the rental schedule in their tax return.

There are still questions about rental income, interest, repairs, depreciation, capital works, property management costs and other expenses.

And importantly, owning an investment property doesn’t automatically make every cost associated with that property deductible.

This is where good records and the correct tax treatment remain essential.

The ATO having some of the information doesn’t remove the need for you to have the rest.

Cryptocurrency is another area where assumptions can cause problems

Crypto is sometimes misunderstood because people associate a taxable event with withdrawing money into an Australian bank account.

It isn’t that simple.

Depending on the circumstances, a capital gains tax event can occur when you sell a crypto asset, exchange one crypto asset for another, use crypto to buy goods or services, or give it away.

So moving from one cryptocurrency to another can have tax consequences even though no Australian dollars have arrived in your bank account.

The ATO also receives information relating to crypto assets through its data-matching activities.

If you’ve been buying, selling or exchanging crypto, keeping appropriate transaction records is important. Trying to reconstruct several years of activity later can be considerably more difficult.

Selling an asset can leave a long trail

The same principle applies more broadly to investments.

If you sell shares, property or another CGT asset, calculating the tax result may require information that goes back many years.

• What did you originally pay?
• What acquisition costs were incurred?
• Were there later costs that may form part of the cost base?
• Have there been corporate actions affecting shares?
• Was the property ever your main residence?
• Was it rented for part of the ownership period?

The sale itself might be visible. The complete history behind the correct tax calculation often isn’t.

This is one reason record keeping matters long before you think you will need the records.

Deductions are different

There is another side to the equation.

Just because the ATO receives a great deal of income and transaction data doesn’t mean it knows what you are entitled to claim as a deduction.

Take working from home.

For the 2025–26 income year, eligible taxpayers using the fixed-rate method can claim 70 cents for each hour worked from home.

But the existence of a fixed rate doesn’t mean you can simply estimate how often you worked at home and enter an amount.

You still need to satisfy the requirements of the method and keep appropriate records of the hours worked from home.

The same underlying principle applies to deductions more generally.

You need to have incurred the expense, there needs to be the necessary connection with earning your assessable income, and you need appropriate records where required.

What if the information doesn’t match?

A difference between third-party information and your tax return doesn’t automatically mean you’ve done something wrong.

There can be legitimate explanations.

Information supplied by a third party could require correction. A transaction might have a different tax treatment from the one initially assumed. An amount may relate to more than one taxpayer. Or there may simply be additional facts that aren’t apparent from the data alone.

What matters is being able to explain the position and support it with appropriate records.

Ignoring information because you hope the ATO won’t know about it is a very different proposition.

Data doesn’t replace advice

There is an interesting contradiction in the modern tax system.

The ATO has access to more information than ever before, but that doesn’t necessarily make individual tax affairs simpler.

Data can tell us that a transaction happened.

It doesn’t always tell us why it happened, the circumstances surrounding it or how Australia’s tax law applies to those circumstances.

That is where context matters.

Two people can undertake transactions that look very similar in a dataset but have quite different tax outcomes because their circumstances are different.

Before you lodge, tell us the whole story

When we’re preparing a tax return, we’d much rather hear about a transaction and determine that it doesn’t need to be included than discover later that something important was left out.

Sold some shares?

Tell us.

Started trading cryptocurrency?

Tell us.

Bought or sold a property?

Tell us.

Started earning money through an online platform?

Tell us.

Changed the way you work or started working from home?

Tell us.

Received income or acquired assets overseas?

Tell us.

Some of those things may have straightforward tax consequences. Others may require a closer look.

The important thing is that we know about them.

The ATO may already have part of the picture. Our job is to make sure your tax return reflects the whole picture.

At Indigo Financial, we help our clients understand what needs to be included in their tax returns, what they may legitimately be entitled to claim and where a transaction requires closer consideration.

Before you lodge, talk to us about anything that changed during the year. Sometimes the detail that seems least important can be the one we most need to know about.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding any of your accounting, taxation and business development needs.

Sources
Australian Taxation Office, How we use data matching
Australian Taxation Office, Crypto assets data-matching program protocol
Australian Taxation Office, Crypto asset transactions
Australian Taxation Office, Working from home expenses