The Australian Taxation Office (ATO) has today announced its 3 key focus areas for this Tax Time:
- Rental property deductions
- Work-related expenses
- Capital gains tax.
ATO Assistant Commissioner Tim Loh said the ATO is continuing to prioritise areas where we often see mistakes being made.
‘Within these areas, we have identified common mistakes, and are particularly focused on addressing these and supporting taxpayers and registered tax agents to get their claims right this year.’
Rental property deductions: landlords – listen up!
The ATO’s review of income tax returns show 9 in 10 rental property owners are getting their return wrong, and often sees rental income being left out, or mistakes being made with property related deductions – like overclaiming expenses or claiming for improvements to private properties.
Around 87% of individual rental owners use a registered tax agent to prepare their income tax returns.
‘We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return,’ Mr Loh said.
The ATO is particularly focused on interest expenses and ensuring rental property owners understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes (or the loan was re-financed with some private purpose).
‘You can only claim interest on a loan used to purchase a rental property to earn rental income – don’t forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income,’ Mr Loh said.
The ATO has sophisticated data matching capabilities which include rental property-related data and has recently implemented a new residential investment property loans data matching program.
‘This is just one example of the work we are doing to help you get your return right and make sure people are claiming expenses correctly,’ Mr Loh said.
