The Australian Taxation Office’s (ATO) has recently expanded its data gathering and analytical skills which will have significant impacts for people investing in Australian real estate. With these additional capabilities aimed at cracking down on tax compliance, the ATO are making it harder for property investors in Australia to avoid review and penalties.
Through the acquisition of comprehensive records from providers of property management software, the ATO has extended its data matching initiative. According to a recent government statement, this seven-year endeavour will cover around 2.3 million user records from 2018-19 to 2025-26. The data acquired includes the property owner’s identification, transaction information, account balances, revenue, and expenses, all of which affect both residential and commercial properties.
Furthermore, banks, local governments, and property managers are the ATO’s direct data sources. This implies that the ATO now has access to detailed data regarding your costs, rental income, and even the occupancy rates of your property. The ATO is covering everything, including development permits, ownership data, and appraisals.
Three key areas are the focus of the ATO’s increased scrutiny:
1. Deductions: A big warning sign is an erroneous or inflated deduction. All claims, whether they relate to management costs, loan interest, or property repairs, need to be precise and well-supported by records.
2. Record-Keeping: It’s vital for landlords to keep accurate and detailed records of all transactions involving their rental properties to ensure any claims can be supported.
3. Income Reporting: It is almost difficult to underreport or hide rental income thanks to the ATO’s new data sources. To avoid fines, all rental income must be accurately disclosed. The focus of the crackdown is not just on conventional rental homes.
The ATO is also concentrating on deductions for working from home and short-term rentals, including those listed on platforms like Airbnb and Stayz.
Considering the ATO’s expanded authority and stricter methods, this is the ideal moment to organise your tax matters. We at Altias Advisory are aware of the intricacies of the real estate industry and the difficulties investors face in maintaining tax compliance. We have successfully helped a large number of our clients who are real estate investors navigate these challenges.
How Altias Advisory can help you.
We will assist you in determining valid deductions and making sure they are properly documented to lower the possibility of ATO investigation. The ATO is only going to step up its crackdown. You can make sure that your investments in rental properties stay profitable and compliant by collaborating with Altias Advisory.
Contact us to learn more about the potential effects of the ATO’s crackdown and how we can help.
