Australia’s tax office has vowed to crack down on unreliable tax returns after it was revealed that 90 per cent of rental property owners were making false statements.
With the 2022-2023 tax year ending in just over six weeks, the ATO has warned it will focus on rental housing deductions, work-related expenses and capital gains taxes.
The ATO claimed that ‘nine in ten rental property owners get their returns wrong’, prompting the IRS to crack down on landlords this time.
An astonishing 90 per cent of rental property tax returns are incorrect, Australia’s tax authorities have revealed. Tenants are depicted in a rented house
Assistant Commissioner Tim Loh called it “a truly unacceptable rate.”
“The ATO is stepping up its oversight to ensure that rental property owners and their tax advisors understand their obligations,” he said.
The ATO said many landlords made the same mistakes over and over again.
Omitting rental income or making mistakes when deducting property were among the most common mistakes.
“We encourage rental property owners and their registered tax advisers to take extra care this tax time and review their records before filing their returns,” Mr Loh said.
The ATO has urged landlords to properly apportion loan interest charges when part of the loan was used for private purposes.
‘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 make on an interest deduction for the part that relates to generating your rental income,” said Mr. Loh.
Homes with rooms rented through platforms such as Airbnb may be subject to capital gains tax, the ATO said, warning owners to declare them.
The tax office uses data-matching technology to track profits on real estate, stocks, cryptocurrencies and other assets.
Generally, your primary residence is exempt from CGT (capital gains tax), but if you have used your residence to generate income, such as renting it out in whole or in part through the sharing economy, e.g. Airbnb or Stayz, or running a business from home, then CBT may apply,” Mr Loh said.
“Don’t fall into the trap of thinking we won’t notice if you sell an asset at a profit and don’t declare it… you can’t hide anymore.”
Last week’s federal budget papers showed that the Treasury Department will crack down on compliance and aims to recover $9.1 billion in unpaid taxes over the next five years.
The end of the low- and middle-income tax offset may leave some people with an unexpected tax debt instead of the refund they’ve received in recent years.
Workers earning less than $126,000 a year will be hit with up to $1,500 less in their pocket by the end of compensation.
With the 2022-2023 tax year ending in just over six weeks, the ATO has warned it will crack down on investors in rental properties. The photo shows a sign with a property for rent
Australians working from home have been required to keep a diary of every hour at work since March 1 – with accountants predicting new rules they will be $629 a year worse off (stock image)
People who earn $100,000 are $1,200 worse off, while those who earn $90,000 earn 2.1 percent less.
Residents with a $50,000 salary will be 3.4 percent worse off, which equates to about $29 a week less in their after-tax income.
The low and middle income tax offset was introduced for fiscal year 2018-2019, with the offset originally set at $530.
The value was then increased to $1,080 before the 2019 election before being increased to $1,500 in March 2022.
With workers facing more tax scrutiny than ever before, another area being hit hard is working from home.
Since March 1, when Australia emerged from the Covid-19 pandemic, every employee has been required to keep a diary of all the hours they work from home.
The ATO no longer accepts estimates of how many hours someone has worked from home or even a four-week statement at the end of each month.
The ATO has advised employees not to “just copy and paste” last year’s claims about working from home.
Accountants H&R Block predicted the new rules will make workers $629 a year worse off.