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ATO to crack down on rental income inaccuracies this tax time

By Juliet Helmke
19 May 2022 | 10 minute read
ATO new reb

Rental property income and deductions will be among the most scrutinised items this tax time, according to the Australian Taxation Office (ATO).

The agency has said that it will be looking closely to ensure rental property owners are declaring all of their income and cited landlords’ tax returns as one of four key areas of focus going into tax season.

It will also be looking at the accurate reporting of capital gains from property sales.

The ATO’s other areas of focus this year relate to record keeping, work expenses, and capital gains from crypto-assets and shares.

Identifying focus areas helps the agency ensure “there is an appropriate level of scrutiny on correct reporting of deductions and income”, it said in a statement announcing the yearly priorities.

ATO assistant commissioner Tim Loh acknowledged that the agency had trained its sights on “problem areas where we see people making mistakes”.

In making claims on this year’s return, Mr Loh said that taxpayers should ensure they follow what he called “the three golden rules” and double-check that they satisfy these requirements:

  • You must have spent the money yourself and weren’t reimbursed.
  • If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income.
  • You must have a record to prove it.

The agency has particularly advised rental property owners to confirm they’re not overlooking any income generated from the property this year.

This includes money from “short-term rental arrangements, insurance payouts and rental bond money you retain”.

Mr Loh added: “We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually.

“If we do notice a discrepancy it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return. We can also ask for supporting documentation for any claim that you make after your notice of assessment issues.”

He also reminded that taxpayers have an obligation to calculate the capital gain or capital loss from the sale of property transacted throughout the year. The office will be paying close attention to real estate-related declarations, as well as capital gains or losses claimed in relation to the trading of shares or digital coins.


Juliet Helmke

Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.

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