It is tax return time, and every tax filer is hoping that their return is correct, that they will receive a refund and that the ATO won't select them for an audit this year. The Australian Tax Office has already announced that this year's audits will focus on those people who make "excessive tax deductions." As someone who makes a reasonable number of deductions, this does not mean you are clear of an audit. There are a number of ways the ATO is cross-referencing the claims that you make, and these are the two points you need to know.

Data Matching

There are a number of third-party agencies that supply data to the ATO, and the ATO then uses this data to cross-reference the deductions you place on your return. For example, it is a legislative requirement that all Australian banks report the interest amounts paid to individuals and companies. The ATO then checks the amount of interest paid to you against the amount of interest you claim was paid to you. If you have not declared any interest received, or there is a big discrepancy between the amounts, you could receive a "please explain" letter in the mail from the ATO.

However, you could also be setting yourself up for an audit just because of things you are openly posting online.

Social Media

The ATO has a set of data mining specialists who take a closer look at people when red flags are raised about deductions and expenses claimed on a tax return. For example, say you put in a claim for a business trip and fudge the dates a little so you can claim a bigger deduction. At the time it seems harmless enough. But, the ATO algorithms call an investigator's attention to your claim. The ATO investigator then takes a look at your not-so-private Facebook page and sees a photo of you hanging out with the family at home on the same dates that you've claimed to be overseas. Here comes that "please explain" letter again.

While the ATO does not actively look at every single tax payer's social media posts, they will use your social media accounts to verify information if there is a suspicion that you are not honest with your tax return.

If you have concerns that your tax return is going to flag attention from the ATO, take it to a specialist tax accountant to discuss further. Even if you have already filed your tax return, it is relatively easy to make an amendment, and your accountant can help to do this.