OSR NSW provides a good summary of how it works using and sharing ATO data in a two way process. It can be assumed same applies to every state & Territory. It is important to understand that states also receive a share of GST revenue AND 100% of duties so detection of property sales and transfers etc involve far more than just income tax. Its in the state interests to assist the ATO to find unreported GST revenue since they get a share of it. OSR NSW says: Information we exchange with the ATO We work closely with the Australian Tax Office (ATO) to share information and data. We use ATO information to: identify businesses that should be registered for payroll tax by using the data from business activity statements (BAS) identify differences in payroll tax by matching ATO’s data on business wages, salaries and fringe benefits with our data identify discrepancies in property-related sales for duties and exemptions for land tax identify recipients of first home benefits who receive a duty exemption or concession, and recipients of the First Home Owner Grant who may not have met the eligibility and residency requirements, through rental and tax return information. The ATO uses our information to: identify businesses that should be registered for pay as you go (PAYG) withholding tax identify discrepancies in property-related sales with reference to income tax, goods and services tax, fringe benefits tax and capital gains tax. States also share this data with other state agencies where this impacts state taxes. A good example is boarding houses. Councils regulate boarding houses on a local level but state law governs all boarding houses and their registration. Hence states agencies like OSRs can be expected to feed information to councils on property that may be non-compliant or fit certain risk parameters. Just like Fire Brigades etc will report illegal property use to councils. NSW Fire & Rescue are state employees who are obliged to report properties to other agencies where risk indicators are evident.
