ATO warns property investors about common tax traps
In 2019/20, over 1.8 million Australians owned rental properties and claimed $38 billion in deductions, so the ATO is reminding property investors to beware of common tax traps that can delay refunds or lead to an audit costing taxpayers time and money.
The most common mistake rental property and holiday homeowners make is neglecting to declare all their income, including failing to declare any capital gains from selling an investment property.
Assistant Commissioner Tim Loh said: “To put it simply, you should expect tax consequences for any property that you earn income from that isn’t your main residence.”
“We are expanding the rental income data we receive directly from third-party sources such as sharing economy platforms, rental bond authorities, and property managers. We will contact taxpayers about income they’ve received but haven’t included in their tax return. This will mean they need to repay some of their refund,” Mr Loh said.
So far, the ATO has adjusted more than 70% of the 2019/20 returns selected for a review of rental information.
“Most people we contact about their rental deductions are able to justify their claims. However, there are instances where we have to knock back claims where taxpayers didn’t keep receipts, claimed for personal use, or claimed for ineligible deductions,” Mr Loh said.
We can help make sure you get your rental income and deductions right, including where rental income has been affected by COVID-19. Contact Omnis Group’s Accountants and Business Specialists in Perth on 08 9380 3555.
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