Powered by MOMENTUM MEDIA
realestatebusiness logo

Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

rpm logo latest

ATO increases scrutiny on short-term holiday rentals

By Sasha Karen
15 August 2018 | 1 minute read
magnifying glass docu reb

Watch out, short-term holiday letting landlords! The ATO has announced that it will be launching a data-matching program to pick up those who leave out rental income and over-claimed deductions.

The increased scrutiny of short-term holiday rentals, according to assistant commissioner Kath Anderson, comes following the availability of short-term holiday rentals exploding in the online space.

“With the growing number of homes, apartments, units and rooms available via accommodation sharing sites, there is a real risk some people may not understand their tax obligations,” Ms Anderson said.

Advertisement
Advertisement

The ATO plans to match the data provided by online rental platforms and their related financial institutions with ATO records in order to find landlords who are ignoring the appropriate checks, such as registration, reporting, lodgement payment obligations, income received per listing, listing dates, enquiry and booking rates, and prices quotes and charged per night.

“We are increasingly using data and technology to identify any missing income in your tax returns. This data will also identify taxpayers who use sharing economy rental platforms to list a property that is not genuinely available for rent in order to claim unwarranted deductions. There is no high-tech hideaway for rental income,” Ms Anderson said.

“The ATO often allows taxpayers who have made genuine errors to amend their returns without penalty. But deliberate attempts to avoid tax on rental income could see the ATO take action.”

For Lisa Peterson, managing director of L’Abode Accommodation, this scrutiny has been a long time coming and should not have been surprising to landlords.

She told REB sister title Smart Property Investment that she was surprised it had not been mentioned sooner, such as during recent discussions around the parliamentary inquiries into short-term holiday letting in Victoria and New South Wales.

“Now that this is published and announced, it will give owners clarity around this but also enforce them to declare any income around short-term rentals,” Ms Peterson said.

“It’s important for owners to keep a record and remember there are tax breaks by declaring this.”

In order for short-term holiday landlords to avoid making mistakes on their tax return, the ATO has provided the following guideline:

1. Declare all income

Regardless of where your income comes from, the statement from the ATO claimed that all income must be declared.

“Any income from renting all or part of a house or unit needs to be declared, even if it is just a one-off. There is no such thing as a rental ‘hobby’,” the ATO guideline read.

2. Only declare income for the appropriate time frame

If you are claiming deductions relating to short-term holiday renting, the ATO statement noted that it should only be done so for the period of time that it was actually rented out.

“Only claim deductions for the periods your property is rented out or is genuinely available for rent. And if you are renting part or all of your main residence, you can only claim deductions for the time it was actually rented,” the statement noted.

“If a property is rented out below market rates, for example to family or friends, deduction claims are limited to the amount of income earned.”

3. Repair and renovation costs are not immediate deductions

If there is any damage to a property, including defects and deterioration that existed during purchase, as well as renovation costs, the ATO statement noted this could not be claimed as an immediate deduction, but as one that can be deducted over a number of years.

4. Keep accurate records

By making sure records are up to date, the ATO stated this provides proof for the landlord of the right figure of rental income and of evidence for claims made.

Those who believe they have made a mistake should contact the ATO as soon as possible, as there is the possibility of reducing penalties for instances where mistakes are brought up before an audit occurs. If an investor is contacted by the ATO, they will have 28 days to verify and clarify any discrepancies.

If a landlord is caught, they can face penalties of up to 75 per cent of the tax shortfall.

ATO increases scrutiny on short-term holiday rentals
magnifying glass docu reb
lawyersweekly logo
Rankings
rankings
JUST RELEASED
May 09, 2022

REB Top 50 Women in Real Estate 2022

REB is thrilled to present the Top 50 Women in Real Estate 2022 ranking, which sets t ... LEARN MORE

rankings
JUST RELEASED
May 04, 2022

REB Top 100 Agents 2022

Now in its second decade, the REB Top 100 Agents 2022 rankings are the most revered s ... LEARN MORE

rankings
JUST RELEASED
May 02, 2022

REB Top 50 Agents NSW 2022

Even a pandemic has not put the brakes on the unstoppable property market in NSW, whi ... LEARN MORE

rankings
JUST RELEASED
April 27, 2022

REB Top 50 Agents VIC 2022

The COVID-19 crisis has not deterred the property market in Victoria, which has been ... LEARN MORE

rankings
JUST RELEASED
April 25, 2022

REB Top 50 Agents QLD 2022

As the property market continues to roar in Brisbane and Queensland, the REB Top 50 A ... LEARN MORE

Coming up

rankings rankings

 

Subscribe to our RPM
mailing list

 

Do you have an industry update?

top suburbs

12 month growth
Box Hill
127.02%
Mollymook
82.85%
Brightwaters
79.93%
Cleve
78.13%
Bawley Point
76.2%
Murrays Beach
75.57%
Terranora
70%
Crescent Head
69.38%
Park Ridge South
68.32%
Mollymook Beach
67.09%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.