ATO Assistant Commissioner Rob Thomson explained the ATO has found the majority of rental property owners are making errors in their tax returns, despite 86 per cent using a registered tax agent.
The most common mistake is not understanding what expenses can be claimed and when. In particular, the difference between what can be claimed for repairs and maintenance versus capital expenses.
Other mistakes on the ATO’s radar include over-claimed deductions and a lack of documentation to substantiate the expenses claimed.
Mr Thomson says the ATO understands rental property owners may already have long lists of things to fix in their properties.
“But by getting your tax return right the first time, you’ll avoid having to add ‘fix up tax return’ to your to-do list down the track,” he said.
The ATO receives data from a range of sources like banks, land title offices, insurance companies, property managers and sharing economy providers, and cross checks this data to determine the accuracy of tax returns lodged by rental property owners.
“If you use a tax agent, make sure you let them know all about your rental property, including full records of your expenses,” Mr Thomson said.
“If you have a nagging question or something doesn’t make sense, make sure you ask your agent when you’re working with them.
“Rental property investments and taxation can get tricky, so it pays to get the right advice from the very beginning.”
For more, ato.gov.au
Rental property owners must prove all expenses
THE Australian Taxation Office (ATO) is warning rental property owners that their tax returns are in the spotlight this tax time.