ATO cracks down on landlords submitting dodgy tax returns
The Australian Taxation Office (ATM) has plans to crack down on landlords submitting dodgy tax returns after an interview found nine in 10 made mistakes and wrongfully claimed expenses.
Those working at home, including those who run home-based businesses and people who earn via short-term rental sites like Airbnb or Stayz, will also be under the thumb this year to file returns correctly, in a new bid to eliminate tax fraud.
The review comes in the wake of a major funding boost to the ATO, announced in the 2023 federal budget, which saw an $89.6 million injection.
The ATO claims there was a tax gap of $9 billion in the 2019-2020 financial year.
Taxpayers paid 94.4 per cent of the whole amount theoretically owed to the Commonwealth, with deductions for rental expenses, including those incorrectly claiming negative gearing deductions, contributing $1.4 billion to the gap.
Australian Tax Commissioner Tim Loh said the ATO will be taking action in 2023.
"We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return," Loh reportedly told The Age.
"You can only claim interest on a loan used to purchase a rental property to earn rental income – don't forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income.”
Loh warned Australians who work from home and advised against the “copy and paste" tax return method.
He said, ” We know a lot of people are working back in the office more compared to last year”, and the method the ATO uses to calculate working from home expenses has now changed.
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