The Australian Taxation Office (ATO) has warned the owners of rental properties to ensure their claims are correct this tax return season as it will be doubling the number of audits scrutinising rental deductions.
The ATO said that in the 2017-18 financial year, more than 2.2 million Australians claimed more than $47 billion in tax deductions.
Assistant Taxation Commissioner Gavin Siebert said rental deductions were now a top priority.
“A random sample of returns with rental deductions found that nine out of 10 contained an error,’’ Mr Siebert said.
“We are concerned about the extent of non-compliance in this area and will be looking very closely at claims this year.”
He said that when it came to dodgy claims, the ATO’s detection methods were becoming more advanced.
“We use a range of third party information including data from financial institutions, property transactions and rental bonds from all States and Territories, and online accommodation booking platforms, in combination with sophisticated analytics to scrutinise every tax return,” he said.
Mr Siebert said that when a concern was identified, ATO staff would investigate and prompt taxpayers to amend unjustifiable claims and, if necessary, would begin audits.
“Over-claiming robs the whole community of essential services and will not be tolerated,” he said.
“The Government recently allocated additional funds to the ATO to extend its program of audits and reviews of rental properties.
“We expect to more than double the number of in-depth audits we conduct this year to 4,500, with a specific focus on over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others, and omitted income from accommodation sharing.”
Mr Siebert said no penalties would apply for taxpayers who amended their returns due to genuine mistakes, but deliberate attempts to over-claim could attract penalties of up to 75 per cent of the claim.
