ATO doubles rental deduction audits

May 2019

Property investors are in the crosshairs of the ATO as it doubles rental deduction audits for what it believes is excessive claims.

In the 2017-18 financial year, more than 2.2 million Australians claimed over $47 billon in deductions and the Australian Taxation Office (ATO) thinks that is too much - one in ten is estimated to contain errors.

4,500 audits of rental property deductions will be undertaken this year with the focus on:

  • Over-claimed interest
  • Capital works claimed as repairs
  • Incorrect apportionment of expenses for holiday homes let out to others, and
  • Omitted income from accommodation sharing.

Deliberate cases of over-claiming are treated harshly with penalties of up to 75% of the claim. 

In one case exposed by the ATO, a taxpayer had to pay back $12,000 in claims for deductions against a holiday home that was not genuinely available for rent and was blocked out during the holiday season. In another, a taxpayer paid back $5,500 because they had not apportioned their rental interest deduction to account for redraws on their investment loan to pay for living expenses.

As always, seek advice about what you can and can't claim because an ATO audit is both an expensive and stressful exercise. Contact us on 02 9957 4033 for more information or contact us by email here.

Follow Bates Cosgrave on Linkedin, Facebook or Twitter


This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

Share this

Get Small Business News each month

ChineseLanguage Select