ATO posts review for online rentals
The Australian Taxation Office (ATO) is launching an extensive data-matching program to identify taxpayers receiving income from short term rentals such as Airbnb and others.
Information from online platform sharing sites for around 190,000 Australians will be examined to identify taxpayers who have left out rental income and over-claimed deductions.
In 2016, approximately 2.1 million individuals reported rental income of $42 billion. Assistant Commissioner Kath Anderson said that rental properties are high on the ATO’s priority list given that the rental market is a significant share of the economy and there is evidence that some taxpayers are getting it wrong.
The ATO will match data provided by online rental platforms and their financial institutions against ATO records to identify taxpayers not meeting their registration, reporting, lodgement, or payment obligations when renting out property on a short term basis.
The data collected will include income received per listing as well as listing dates, enquiry and booking rates, prices charged or quoted per night and other information.
“We are increasingly using data and technology, to identify any missing income in your tax returns. This data will also identify taxpayers who use sharing economy rental platforms to list a property that is not genuinely available for rent in order to claim unwarranted deductions. There is no high-tech hideaway for rental income.
There are a few simple rules rental property owners should follow to avoid making mistakes on their tax return.
First, make sure you declare all your income. Any income from renting all or part of a house or unit needs to be declared, even if it is just a one-off. There is no such thing as a rental “hobby”.
Secondly, only claim deductions for the periods your property is rented out or is genuinely available for rent.
Costs to repair damage, defects or deterioration existing on purchase, or renovation costs, can’t be claimed as an immediate deduction. These costs are deductible over a number of years.
Finally, it is important for all property owners to keep accurate records. This helps to ensure they declare the right amount of rental income and they have evidence for claims made.
Taxpayers or tax agents that have made an error or omission should contact the ATO as soon as possible. Penalties may be significantly reduced in circumstances where we are contacted prior to an audit. Maximum penalties can be as high as 75% of the tax shortfall.
Details of the ATO’s data matching strategies are published at ato.gov.au/datamatching
14 August 2018.