As part of its efforts to curb fraudsters who are taking advantage of rental deductions, the Australian Tax Office (ATO) plans to bolster its detection methods, doubling the number of audits starting this year.
ATO Assistant Commissioner Gavin Siebert said the tax office is making rental deductions a top priority this year.
“A random sample of returns with rental deductions found that nine out of 10 contained an error. We are concerned about the extent of non-compliance in this area and will be looking very closely at claims this year,” he said.
Over the 2017-2018 financial year, Gavin said more than 2.2 million Australians claimed over $47bn in rental deductions. He said ATO is planning to double the number of audits scrutinising rental deductions to prevent dodgy claims.
“We expect to more than double the number of in-depth audits we conduct this year to 4,500, with a specific focus on over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others, and omitted income from accommodation sharing,” he said.
In auditing claims, Siebert said ATO will be using a wide range of information sources from all states and territories, and online accommodation booking platforms.
“Where we identify claims of concern, ATO staff will investigate and prompt taxpayers to amend unjustifiable claims. If necessary, we will commence audits,” he said.
These efforts are all aimed to reduce the number of over-claiming cases which, as Siebert believes, “robs the whole community of essential services.” Those who are caught maliciously attempting to over-claim will be given penalties of up to 75% of the claim. On the other hand, no penalties will apply for taxpayers who corrected their returns due to genuine mistakes.
“This tax time, our message to taxpayers is clear. If you are renting out a room or a property, any money you earn must be declared as income and any deductions you claim may need to be apportioned for private use,” he said.