ATO plans to cross-check property investors’ tax returns
Most property investors are making errors in their tax returns, despite the fact 86% use a tax agent, according to Australian Taxation Office (ATO) Assistant Commissioner Rob Thomson.
The most common mistake investors make is not understanding what costs can be claimed and when – particularly regarding the difference between repairs and maintenance versus capital expenses.
Many investors also over-claim deductions and don’t produce documentation to substantiate their expenses.
The ATO has made it clear it will pay close attention to investors’ tax returns this year – and will cross-check investors’ numbers with data from banks, land title offices, insurance companies, property managers and sharing economy providers.
“If you use a tax agent, make sure you let them know all about your rental property, including full records of your expenses. If you have a nagging question or something doesn’t make sense, make sure you ask your agent when you’re working with them,” Mr Thomson said.
“Rental property investments and taxation can get tricky, so it pays to get the right advice from the very beginning. Don’t rely on things you hear at a Sunday afternoon barbeque.”