Navigating the ATO Crackdown on Rental Property Deductions
The Australian Taxation Office (ATO) is ramping up its scrutiny on rental property deductions, issuing a warning to property owners to ensure accuracy in their claims. With an announcement to double the number of in-depth audits, the ATO aims to tackle erroneous deductions head-on.
In a recent media release titled "Tax office to double audits of dodgy rental deductions," the ATO highlighted the scale of the issue. In 2018 alone, more than 2.2 million taxpayers claimed over $47 billion in rental property deductions, presenting a substantial revenue risk. Shockingly, a review found errors in nine out of ten returns claiming rental properties.
The ATO's intensified focus areas for rental property audits include:
- Scrutinizing interest deductions to ensure correct claims, especially examining if loan funds were diverted for personal use.
- Assessing repairs claims to determine if they should be categorized as capital works.
- Verifying the availability of holiday homes for rent on a commercial basis, ensuring they're not solely used by friends and family at discounted rates.
With penalties totaling $1.3 million from 1,500 rental property audits in 2018, it's clear the ATO is serious about enforcing compliance.
For further guidance or assistance, contact Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment via our live calendar.
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