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The ATO has warned rental property owners to make sure that their claims are correct this tax time, as it intends to prioritise deductions and double its rental audits.
Assistant commissioner Gavin Siebert said that, in the 2017–18 financial year, more than 2.2 million Australians claimed over $47 billon in deductions.
He said that this year the ATO has made rental deductions a top priority.
“A random sample of returns with rental deductions found that nine out of 10 contained an error. We are concerned about the extent of non-compliance in this area and will be looking very closely at claims this year,” he said.
Mr Siebert said that the ATO’s detection methods are 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.
“Where we identify claims of concern, ATO staff will investigate and prompt taxpayers to amend unjustifiable claims. If necessary, we will commence audits.”
Mr Siebert said that overclaiming is problematic.
“Overclaiming robs the whole community of essential services and will not be tolerated by the Australian community. 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 overclaimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others, and omitted income from accommodation sharing.
“Once our auditors begin, they may search through even more data including utilities, tolls, social media and other online content to determine whether the taxpayer was entitled to claims they’ve made.”
Mr Siebert said that deliberate attempts to overclaim can attract penalties of up to 75 per cent of the claim.
He said that last year the ATO audited over 1,500 taxpayers with rental claims and applied penalties totalling $1.3 million.