Rental property deductions in the ATO sights

Recent audit activity by the ATO has led the regulator to conclude that there are significant errors in claims being made by taxpayers against rental income. The ATO’s audit work on over 300 taxpayers found that there were errors in 9 out of 10 cases, with incorrect interest claims for refinanced loans, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent, being the main areas where taxpayers have transgressed.
The ATO’s previous blitz on work related expenses dropped the average claim by just $130, resulting in an extra $600 million in government revenue. With this in mind, the focus on rental property claims is set to continue, in the hope that it too will result in a windfall to government coffers. Taxpayers have been put on notice.

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