ATO set to scrutinise landlords’ tax returns

It will also be looking at the accurate reporting of capital gains from property sales – another problem area that seems to cause confusion among taxpayers.

The ATO’s other priorities 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.

In making claims on this year’s return, ATO assistant commissioner Tim Loh said that taxpayers should ensure they follow what he called “the three golden rules”.

For landlords, this means double-checking that your deductions 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 providers to confirm they’re not overlooking any income generated from their portfolio 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 you’re unsure about what you need to declare, Mr Low suggested asking a registered tax agent for assistance.

The consequences of making a mistake will, at the very least, lengthen the time it takes for you to receive any funds owing to you by the Tax Office.

“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,” Mr Loh advised.

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.