ATO documents reveal “elevated” fraud and tax avoidance risk among 457 visa holders

The details of around one million foreign workers in Australia will be supplied to the Australian Tax Office for data matching, as the government continues to target 457 visas, Immigration Minister Brendan O’Connor announced yesterday.

The ATO is aiming to determine foreign workers’ compliance levels with tax obligations, and also strengthen its data-matching capabilities.

The data-matching process for foreign workers in Australia, here under 27 different visa categories, began in 2010, but April 2013 documents seen by SmartCompany show the ATO believes foreign workers are more likely to be non-compliant and have an “elevated level” of risk.

“Analysis of data obtained from the Department of Immigration and Citizenship about temporary working visas in 2010 and 2011, under previously published data matching program protocols, supports that there was an elevated level of risk relating to non-compliance and fraud associated with this population,” the documents state.

“Based on those identified risks, the ATO intends to acquire temporary working visa data for visas granted in the period 1 July 2011 to 30 June 2012 and future periods between 1 July 2012 and 30 June 2014.”

Data matching is being increasingly used at the ATO in order to catch people using tax loopholes, or who are simply avoiding paying tax altogether.

A spokesperson for O’Connor told SmartCompany the Immigration Department wants to ensure the “integrity of the immigration program”.

“While this is not a specific crackdown, it is another example of the government working to ensure the integrity of the immigration program and to ensure that locals are not missing out on work opportunities to visitors who do not have the correct work rights,” the spokesperson said.

The ATO says undertaking the Immigration Department’s data-matching program will “assist us in investigation and taking steps to mitigate fraud on the government’s revenue”.

Earlier this year, the government began cracking down on 457 visas, with O’Connor saying there has been a 21.5% spike in the number of visas granted in the year to February 2013.

Prime Minister Julia Gillard has said Labor will “stop foreign workers being put at the front of the queue with Australian workers at the back”.

The move has been applauded by unions, but business groups have criticised the crackdown.

Mick Liubinskas, co-founder of online venture builder Pollenizer, told StartupSmart tech companies are forced to hire workers from overseas because of a lack of local talent.

“I think there are a lot of people in the tech industry working very, very hard… To think we are intentionally hiring overseas people [over Australians] – it’s just crazy,” he says.

The Australian Financial Review reported this morning the Labor Party is planning advertisements focused on the targeting of 457 visas in the lead up to the election, as party research indicated the message resonated with voters.