ATO doubles rental deduction audits

In the 2017-18 financial year, more than 2.2 million Australians claimed over $47 billon in deductions and the Australian Taxation Office (ATO) thinks that is too much – one in ten is estimated to contain errors.

4,500 audits of rental property deductions will be undertaken this year with the focus on:

  • over-claimed interest
  • capital works claimed as repairs
  • incorrect apportionment of expenses for holiday homes let out to others
  • omitted income from accommodation sharing

Deliberate cases of over-claiming are treated harshly with penalties of up to 75% of the claim.

In one case exposed by the ATO, a taxpayer had to pay back $12,000 in claims for deductions against a holiday home that was not genuinely available for rent and was blocked out during the holiday season.

In another, a taxpayer paid back $5,500 because they had not apportioned their rental interest deduction to account for redraws on their investment loan to pay for living expenses.

If you have a rental property – you may want to consider having Accountancy Insurance.

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