Are you wondering what’s with ATO’s crackdown on property investment owner deductions? Well, below you’ll find out why they are doing this and if it’ll affect you.
If you’ve been following Australia’s property investment, you might have heard about a looming crackdown. Whether you’ve heard about it or not, there is no need to worry. Why? Well, this post covers key details about this crackdown. By the time you’re done reading it, you’ll know key details about this looming crackdown.
So what is this looming property investment crackdown all about? Well, it’s a crackdown on property investment owner deductions. This crackdown has been initiated by the Australian Taxation Office or ATO. Their main goal with this crackdown is tax returns. In particular, they are targeting property investors who knowingly or not make errors on their returns. Why? Well, they are seeing lots of errors on returns made by property investors.
Chris Jordan, the commissioner of ATO, helped shed light as to why his organization opted for this. So how bad is property investment owner deductions? Well, the commissioner said that wrong interest claims are evident in just about every investment loan. To make matters worse is that this also includes investment loans refinanced for private purposes. In terms of figures, they found out that 9 out of 10 returns made by real estate investors had errors. Given that they did an audit on 300 rental property claims, this is a very high number.
Why Are They Carrying Out This Crackdown Now?
Looking at potential revenue at risk helps to understand why ATO is carrying out this crackdown now. To be direct, the numbers are not that good. In fact, they are extremely high. Currently, there are over 2.1 million taxpayers in Australia. These taxpayers claim $47.4 billion in deductions against $44.1 billion in reported income. As you can tell, the potential revenue at risk here is huge. It is with this that they are carrying out a property investment owner deductions crackdown.
So How Big Is The Crackdown Going To Be?
With potential revenue risk being so high, it is only right that they go big with the crackdown. That said the ATO is targeting 2.1 million real estate investors. With these 2.1 million real estate investors, the ATO has two main purposes. One, they are looking to correct the return errors made by property investors. Two, the ATO is also looking to catch inappropriate claims made by real estate investors. This they hope will help them reduce potential revenue risk.
What To Know About ATO’s Property Investment Crackdown
In addition to long-term and short-term rentals, ATO is adding other targets to its watchlist. Most importantly, they are focusing on Investors exploring options in platforms like Airbnb. For this particular type of property investor, the ATO is planning to use a few key details. These details are;
- Income Received Per Listing
- Listing Dates
- Rental Prices (This Includes Per Night)
- Booking Rates
- Enquiry Rates
With this information in hand, they’ll be able to identify property investment owner deductions. In other words, they’ll be able to know property investors who are not meeting their tax obligation. Additionally, the ATO is looking at travel deduction rules set up. In particular, they’ll see to it that property investors comply with these rules.
Do you have property investment questions you need assistance with? Well, get in touch with Duplex Invest. Our team of experts will help guide you through your property investment journey the right way.