ATO Crackdown On Property Investment Owner Deductions

If youve been following Australias property investment news you might have heard about a looming crackdown in regards to property investment owner deductions.

Apparently, there have been a high number of investors that have been incorrectly filing their deductions. In some cases its accidental, but in other cases its been intentional. The ATO is looking to correct this in order to reduce the number of errors and regain lost revenue.

So, is this crackdown something you should be concerned about? Keep reading to learn everything you need to know.

Why are they Cracking Down Now?

According to Chris Jordan, the commissioner of the ATO, the wrong interest claims are evident in just about every investment loan. This also includes investment loans refinanced for private purposes. In a recent audit, they found that a staggering nine out of ten returns made by real estate investors were done incorrectly.

Not only do these errors result in unnecessary labour for the ATO, but theres also a lot of revenue at stake. Investors are claiming $47.4 billion in deductions against $44.1 billion in reported income. So, the potential revenue at risk here is huge if they dont resolve the problem.

How Severe is the Crackdown Going to Be?

The ATO will be targeting 2.1 million real estate investors as part of this initiative. The crackdown has two main purposes:

  • Correct the return errors being made by property investors.
  • Catch inappropriate claims that are trying to circumvent tax laws.

Theyre hoping this will be enough to reduce the potential revenue risk.


They are Specifically Targeting Airbnb Rentals

In addition to long-term and short-term rentals, the ATO is adding other investment types to its watchlist. Most importantly, they are focusing on investors who are renting their units out through platforms like Airbnb.

For these types of rentals, the ATO will be looking at a few key details:

  • Income received per listing
  • Listing dates
  • Rental prices (this includes per night)
  • Booking rates
  • Enquiry rates


Using this information, theyll be able to identify property investors who arent meeting their tax obligations. Additionally, the ATO is looking at travel deduction rules and how they can ensure property investors comply with these regulations.

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