ATO to swing axe on landlords submitting dodgy tax returns
The Australian Taxation Office (ATO) has vowed to crack down on landlords submitting dodgy tax returns, after a recent review found nine in 10 made mistakes and wrongfully claimed expenses.
Those working from home, as well as those who run home-based businesses, and people who earn income from short-term rental sites like Airbnb or Stayz, will also be under added pressure this year to file returns correctly, in a new bid to stamp-out tax fraud.
The review comes amid a major funding boost to the ATO, announced in last week's budget, which saw an $89.6 million injection – expected to increase Tax Office receipts by $474.9 million over five years.
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According to the ATO, 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 people incorrectly claiming negative gearing deductions – contributing $1.3 billion to the gap.
This year, Assistant Tax Commissioner Tim Loh said the ATO would be cracking down.
"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 said, according The Age.
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"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 specifically warned Aussies who continue to 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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