Tax returns Australia: Warning issued amid crackdown on illegal act

The tax office received a financial boost in the budget so it could crack down on those who file false claims in their tax returns, angering a lobby group.

This month, Treasurer Jim Chalmers allocated an additional $89.6 million to the Australian Taxation Office to expand its Personal Income Tax Compliance Program.

While most of that funding will be rolled out from July 2025, the IRS will have more resources to crack down on tax claims from July this year.

This will leave tax officials targeting investor landlords renting out a property, lazy Australians filing work-related claims that cut and paste from last year’s proceeds, and homeowners selling a property.

The tax office will receive a total of $474.9 million in fiscal years 2025-26 and 2026-27.

The chair of the Australian Taxpayers Alliance, Brian Marlow, who heads a libertarian lobby group, said the tax authorities’ action was unjustified and has launched a petition against it.

“Labor is actually weighing down the pockets of ordinary Australians who are already feeling the strain,” he said.

“These measures will exacerbate the financial pressures ordinary Australians face, stifling economic growth and hindering our ability to emerge from these challenging times.”

The crackdown on the tax will hurt investors who have weathered 11 rate hikes from the Reserve Bank in the past year.

But this also coincides with the fact that Australia has an ultra-low vacancy rate in the capital of 1.2 percent, driving weekly rental costs up 20.7 percent over the past year, data from SQM Research showed.

The Treasury documents announced that the tax office would have more resources to deal with landlords who have placed their homes on the short-term rental market — such as Airbnb — then claim deductions designed to boost the supply of long-term leases.

“This expansion will enable the ATO to continue to deliver a combination of proactive, preventive and corrective activities in key areas of non-compliance, as well as expand the scope of the program to address emerging risk areas such as deductions with regard to short-term contracts. long-term rental properties to ensure they are actually available to rent,” it said.

Last week, the tax office announced it would crack down on investor landlords because nine in 10 misunderstood their claims by not including rental income.

Those who make a loss on a rental property can negatively tune it.

Treasurer Jim Chalmers allocated an additional $89.6 million this month to the Australian Taxation Office to expand its Personal Income Tax Compliance Program (pictured left with his wife Laura)

ATO Assistant Commissioner Tim Loh said the tax office would focus on investors claiming personal tax relief.

‘You can only claim interest on a loan used to buy a rental property to earn rental income – remember that if your loan also includes private costs, such as for a new car or a trip to Bali, you can only claim you can take on an interest deduction for the part that relates to generating your rental income,” he said.

Mr Loh said individuals cutting and pasting from their previous tax returns would also be caught.

This follows a work-from-home rule change that allows professionals to claim only 67 cents an hour instead of 80 cents before.

“There have also been some changes to the way you calculate things, such as home office deductions, so don’t be tempted to just copy and paste your previous year’s claims,” ​​Mr Loh said.

ATO Assistant Commissioner Tim Loh said the tax office would focus on investors claiming personal tax reliefs

“We know that many people work more in the office than last year.”

The Tax and Customs Administration also has its sights on homeowners and investors who sell a home.

The family home, or one’s main residence, is exempt from capital gains tax.

But the tax still applies to investors, especially those who have rented out a property on the short-term rental market.

“If you’ve used your home to generate income, such as renting it out in whole or in part through the sharing economy, such as Airbnb or Stayz, or running a business from home, then CGT may apply,” Loh said.

Mr Marlow said the IRS crackdown is likely to hurt small business owners more, with inflation reaching 7 per cent – or a level more than double the Reserve Bank’s target of 2 to 3 per cent.

“These measures, buried deep in Labour’s budget papers, will burden you with higher taxes at a time when the economy is struggling and the cost of living is soaring,” he said.