Accountant raises alarm on ATO investor tax crackdown
Property investors must be “particularly careful” not to understate their income or overclaim expenses this tax time, an accountant has warned.
It follows the revelation that the Australian Tax Office (ATO) would be further scrutinising 1.7 million Australian property investors this tax time, through the use of a data matching program, which will see the tax office be able to obtain data from 17 Australian financial institutions.
The director of tax communications at H&R Block, Mark Chapman, has acknowledged that the ATO would be “backing up its existing compliance focus on rental properties” through the program.
Mr Chapman said the initiative comes as the ATO claims that “as many as 90 per cent of all rental claims are incorrect.”
Stressing to property investors the need “to be particularly careful not to understate your income or overclaim your expenses when you complete your 2023 tax return,” the accountant flagged that the data matching program would be able to collect client identification details, inclusive of names, addresses, phone numbers and birth dates, loan account details, transaction details, and even property details — the addresses of the loan assets.
According to the director, that means the ATO will have “independent, third-party verification of tax return information.”
He warned that its ability to highlight the existence of rental properties “will help catch taxpayers who fail to declare that they own a rental property in their tax return.”
Not only that, it will also enable the ATO to catch “both non-reporting of rental income and capital gains.”
It will also make the ATO better able to verify loan interest claims, which Mr Chapman said is “by far the biggest tax deduction claimed by rental property owners.”
The director’s warning is not only applicable for the 2023 tax return period; he highlighted that the ATO will be receiving information for the period from 2021–22 to 2025–26.
You can find more information about the scheme here.
With 2023 tax time looming, the head of property management at a national real estate network has offered up a number of tips for landlords who want to get ahead on their tax planning this year. Here are six ways landlords can get ready for tax time.
Smart Property Investment has previously written an article: How do you calculate cash flow for an investment property?
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