Nearly nine in 10 property investors commit errors when claiming tax deductions on their rentals. This pushed the Australian Taxation Office (ATO), to give better attention to the property claims made at tax time, according to a report by Domain.
In a speech in Hobart last week, tax commissioner Chris Jordan revealed that over 2.1 million taxpayers are claiming $47.4 billion in deductions against $44.1 billion in reported income.
“You can get a sense of the potential revenue at risk,” he said.
As part of ATO’s initiative to focus on rental income and deductions, it has been taking concrete steps in line with its broader random enquiry program.
“Our auditors have now completed over 300 audits on rental property claims and found errors in almost nine out of 10 returns reviewed,” Jordan said. “We’re seeing incorrect interest claims for the entire investment loan where it has been refinanced for private purposes, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent.”
Jordan believes that agents could cut the number of incorrect claims, as the majority (85%) of taxpayers with rental properties seek help from them when it comes to with their tax returns.
Property investment is a major issue at the upcoming federal election. The Labor Party has been vocal in planning to limit tax deductions for negatively-geared properties to new housing only and grandfather-existing investment, while the Coalition has said that it will keep the rules unchanged.
