Assistant Commissioner, Kath Anderson, has come out recently and stated that expense claims are running to thousands of dollars for occasionally rented holiday homes, and will fall foul of the ATO’s crackdown on property deductions.
"2.2 million property owners filed rental expense claims of $42.6 billion in 2021, but full compliance by the sector would add $1.6 billion in revenue". As a result, she called on tax agents to help bring owners into line.
Is it OK for holiday owners to claim thousands of dollars in deductions for their Holiday House?
Ms. Anderson noted that although holiday homes may appear minor in the grand scheme of things, she strongly believes that most Australians would not think it's OK for someone to claim thousands, and in some cases hundreds of thousands of dollars in deductions for their holiday home.
Errors are found in tax returns that are effectively prepared by agents who are not qualified. The returns are quite often not provided with appropriate or accurate information.
She also called upon accountants to educate clients about what is a valid rental deduction and what is not.
We need to deliver a clear message
"It is essential that a clear message is delivered that claiming deductions and effectively taking money from the community to pay for a holiday home is not OK", said Ms. Anderson.
"Rental property claims were high on the ATO’s hitlist for 2022-2023" as it attempted to reduce the tax gap.
The difference between what is collected and what full compliance would yield is down from $33 billion. "That gap represents an unfair advantage that those not doing the right thing have over those who are doing the right thing and in the context of a business, especially a small business, this unfair advantage can be significant".
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Digital systems will make it easier for property tax agents
The increasing digitisation of ATO processes was a key feature of the compliance mission but would also make the work of tax agents easier.
“In 2022-23, you'll see us continuing to use data as much as we can. We’ll provide it in prefill and will harness advances in digitalisation and data to provide more real-time nudges and prompts for income and claims that seem to be a little bit outside of the norm,” she said.
Have questions about your investment property?
If you're unsure about your holiday home rental expense claims please contact First National Neilson Partners Property Management at Berwick, Narre Warren, or Pakenham where one of our friendly team of real estate agents and property managers can help you with your queries.
