ATO ramping up audits on landlords

The ATO is ramping up audits of taxpayers with rental deductions after finding nine in 10 claims contained errors.

The ATO is ramping up audits of taxpayers with rental deductions after finding nine in 10 claims contained errors.

The ATO has audited 1500 taxpayers with rental claims and applied penalties totalling $1.3 million in 2017-18, but expects to carry out 4500 audits this tax time.

One investor was fined more than $12,000 for over-claiming deductions on a holiday home because investigations revealed it was not made genuinely available for rent.

ATO officials have found the property was unavailable during peak holiday periods.

Another taxpayer has had to pay back $5500 because they had not apportioned their rental interest deduction to account for redraws on their investment loan to pay for living expenses.

"We are concerned about the extent of non-compliance in this area and will be looking very closely at claims this year," assistant commissioner Gavin Siebert said.

He warned the ATO's methods for detecting dodgy claims were becoming more advanced, and included the use of social media and other online content to check claims.

"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," Mr Siebert said.

"Where we identify claims of concern, ATO staff will investigate and prompt taxpayers to amend unjustifiable claims. If necessary, we will commence audits," he said.

The proportion of Australia's 2.2 million landlords who are negatively geared fell to 60 per cent in fiscal 2017, the lowest level since 2003,

The ATO has nonetheless received additional federal government funding for audits and reviews of rental properties.

"We expect to more than double the number of in-depth audits we conduct this year to 4500, with a specific focus on over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others, and omitted income from accommodation sharing," Mr Siebert said.

"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," he said.

While no penalties will apply for taxpayers who amend their returns due to genuine mistakes, deliberate attempts to over-claim can attract penalties of up to 75 per cent of the claim.

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Source: https://www.afr.com/news/policy/tax/tax-office-to-ramp-up-audits-of-landlords-20190417-p51eyr


Marlene Liontis
Friday, 19 April 2019

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