The ATO has announced an increased focus on rental property deductions, urging taxpayers to double-check all claims before lodging their return this tax period.
Excessive deductions claimed for rental properties, particularly those located within popular holiday destinations throughout Australia, are the main target of the crackdown.
Adam Kendrick, the ATO assistant deputy commissioner, noted that many taxpayers are claiming rental deductions that are disproportionate to the amount of rental income reported.
“We know that it can sometimes be challenging for rental property owners to work out what deductions they can and cannot claim on their holiday homes,” he said.
The ATO will issue reminders to taxpayers throughout these destinations in an attempt to stem instances of incorrect reporting.
“As part of our prevention before correction approach, we are sending letters to taxpayers in approximately 500 postcodes across Australia, reminding them to only claim the deductions they are entitled to, for the periods the holiday home is rented out or is genuinely available for rent,” Mr Kendrick added.
Taxpayers are urged to keep accurate records in an attempt to ensure that the correct amounts of rental income is reported, and that evidence is available for any claims made.
“Rental property owners should only claim deductions for the periods the property is rented out or is genuinely available for rent. If a property is rented at below market rates, for example to family or friends, deduction claims must be limited to the income earned while rented,” Mr Kendrick said.