The ATO hones in on a few industries and key areas each year. This year it has been reported that property investors should again be dotting the i’s and crossing the t’s in their tax returns. This crackdown comes after an ATO analysis has found that there was an error found in 90 per cent of rental deductions.
One of the focus areas for the ATO will be those investors that redraw on their property loans for personal use, yet continue to claim the full interest rate of the loan. So if you’re planning on using funds borrowed from a property investment loan for a holiday or to purchase a car etc. make sure you only claim the interest on the money used on or for the property.
Another announced crackdown will be on those making a single claim on improvements to property that should be claimed as depreciation over several years. In other words, you can’t claim capital works as repairs.
Additionally, the ATO has promised to crack down on those not claiming income from short-term rentals such as Airbnb.
Finally, the ATO has warned they are ‘always watching’ and this year will also be keeping an eye on social media accounts to see if people are living outside their means.
The best way to avoid trouble with the ATO is to ensure you’re compliant all year around. Check out our new financial year post for a load of great tips on making sure you’re set up for success from the get-go. The most important being that it’s best to use a reliable accountant that will help you get a healthy, honest return come tax time.
Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.