Property investors have been put on notice, after the Australian Taxation Office (ATO) said it would scrutinise their tax returns in an attempt to claw back an estimated $1.3 billion in missing taxes.
The ATO told The Guardian that it would use “formal information gathering powers” to compel 17 financial institutions – including all the big four banks – to provide data on approximately 1.7 million property investors.
That would allow the ATO to assess all the income an investor had earned and all the expenses they’d incurred over the course of a year, and to then compare that with their tax return.
According to the ATO, the most common tax mistakes that property investors make are:
incorrectly declaring improvements to be repairs rather than capital works
not apportioning expenses for private use of the property
either not apportioning or incorrectly apportioning the loan interest costs after refinancing for private purposes
That’s why it’s generally a good idea for property investors to get professional help when filing tax returns. If you’d like to be introduced to a trusted accountant, reach out and I’ll be happy to recommend someone.