The Australian Taxation Office (ATO) is expected to send more letters to Australians who have to explain dubious tax returns, in line with its commitment to step up the crackdown on bad debts.
The government agency revealed that she would focus her attention on deductions for investment properties, among others.
"The ATO is on the warpath – it targets investors or homeowners who are not doing what is right," said Peter Locandro, partner, Chan & Naylor Wheelers Hills.
More than 2.2 million Australians have claimed more than $ 47 billion in deductions during the 2017-18 fiscal year, driven by work-related expenses and rent claims – and ATO announced about two months ago that it would double the number of audits reviewing rent deductions
No penalty would apply to taxpayers who change their tax return due to actual errors, but deliberate attempts to make an excessive claim may result in penalties of up to 75% of the claim.
ATO will look at the incorrect allocation of rental income and expenses between owners. For example, deductions on common property are claimed by the owner with the highest taxable income rather than jointly.
In addition, the government agency will reevaluate vacation homes that are not actually available for rent. Rental property owners should only claim for the periods during which the property is rented. Owners must not claim periods of personal use.
"We plan to double the number of in-depth audits that we carry out this year at 4500, putting the focus on the interests too high, the equipment work claimed as of repairs, the incorrect allocation of expenditure for holiday homes left to third parties. other income and omitted income from the sharing of housing, "said Deputy Commissioner Gavin Siebert in a statement. "Once our listeners start, they can search even more data, including utilities, tolls, social media and other online content, to determine if the taxpayer has the right to claim what he did. "
However, many real estate players have insufficient knowledge in the field, according to Locandro.
"Many ordinary Australians have invested in the real estate market over the past 10 years, but do not understand the deductibility of certain expenses. They have been misinformed or simply do not understand the tax rules, "he told Your Investment Property.
Chan & Naylor Wheelers Hills recommends that landowners use a property tax specialist while keeping track of their records.
"You must keep all the documents. This includes, but is not limited to, rental records, bills such as water and board rates, insurance and most importantly, repairs and maintenance. Bank and loan statements are also needed, "Locandro told Your Investment Property. "It's easy to stay ahead – keep good records and claim only what you can legitimately claim. If you can not prove it, do not claim it. Surround yourself with a property tax specialist who does it every day, otherwise the consequences could result in problems and cost you a lot more. "
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