ATO tip-offs kept permanently in database

The Australian Tax Office (ATO) has revealed it retains all information gathered on people who have been investigated for tax evasion even if those suspected have been cleared of any wrongdoing.

(Income tax image by Alan Cleaver, CC2.0)

An Australian National Audit Office (ANAO) report (PDF) commissioned to investigate methods used by the ATO to collect and store information explained that those who suspect others of tax evasion can dob them in via a web form or a special hotline number. On the phone, trained employees would only take information relevant to the investigation of the tip-off; however, the report notes that the web form allows people to enter in irrelevant and incorrect information which would be retained.

"The Tax Office's online tax evasion reporting form encourages informants to provide as much information as possible. This could encourage informants to include allegations of behaviour that is not related to tax evasion," the report stated. "Recording such irrelevant personal information could put the Tax Office in conflict with Information Privacy Principle 1: 'an organisation must not collect personal information unless the information is necessary for one or more of its functions or activities'."

The ANAO also noted that some of the information held by the ATO dated back to the inception of the service back in 1998.

"The Tax Office does not currently delete any information from its Community Information Storage, Communication and Observation (CISCO) database," the report stated. "This means that allegations — including unsubstantiated allegations against individuals from as far back as 1998 — can still be retrieved and referred for investigation."

The report cited a response the Privacy Commissioner gave in an ANAO review in 2008 into a similar tip-off system Centrelink had in place as to why this could be a potential breach of privacy.

"Retaining each piece of tip-off information indefinitely on the off-chance that it may be useful at some future date may be an interference with privacy. The Office [of the Privacy Commissioner] is also of the view that culling unnecessary information is likely to reduce the chance that personal information may be inappropriately accessed, used, modified, disclosed or otherwise misused."

In a statement provided to ZDNet Australia the ATO said it kept the information to prevent repeated investigations into individuals who had been cleared of any wrongdoing before.

"Much of the community intelligence received relates to fraud or evasion and therefore may need to be stored for extended periods to assist in potential future investigations. The ATO also retains information that has proven to be inaccurate to protect the person named in the allegation from being repeatedly examined by the ATO based on future identical information."

The ATO dismissed concerns about how inaccurate and possibly defamatory information provided via the ATO's web form had the potential to be misused.

"Community intelligence information is stored electronically on Australian Taxation Office systems and given as much security as other confidential taxpayer information, which is access controlled and monitored with a full audit trail," the ATO said. "Tax officers can only look at, record, discuss or disclose information when it is a necessary part of their job or where the law specifies that they may."

The ATO agreed with the recommendation made by the ANAO in the report regarding the collection of this information. ANAO recommended that the ATO "identifies and monitors appropriate quality standards for the collection and processing of community intelligence".