Latest Accounting News
Hot Issues
ATO reveals small business hit list to combat tax debt
What are the FBT implications of Employee Christmas Parties and Gifts?
Assess a business before you buy it
Christmas Parties and Taxi Fare/Rideshare – FBT implications.
Practitioners cautioned on ATO’s top target areas for GST
ATO to target growing businesses in latest compliance blitz
Our SG compliance results are here
Top 20 Most Watched Christmas Movies ever - pre covid
A Unique Advent Calendar
Businesses ghosting the ATO targeted in debt collection blitz
Claiming the tax-free threshold: getting it right
Aussies tired of ‘dodgy tax criminals’, warns ATO
Protect your small business by following these essential steps.
Super guarantee a focus area for ATO business debt collection
Controversial ‘Airbnb tax’ set to become law
Withholding for foreign residents: an ATO focus area
1 in 3 crypto owners confused about tax, study reveals
20 Years of Silicon Valley Trends: 2004 - 2024 Insights
ATO reveals common rental property errors from data-matching program
New SMSF expense rules: what you need to know
Government releases details on luxury car tax changes
Treasurer unveils design details for payday super
6 steps to create a mentally healthy and vibrant workplace
What are the government’s intentions with negative gearing?
Small business decries ‘unfair’ payday super changes
The Leaders Who Refused to Step Down 1939 - 2024
Time for a superannuation check-up?
Scam alert: fake ASIC branding on social media
Millions of landlords the target of expanded ATO crackdown
Government urged to exempt small firms from TPB reforms
ATO warns businesses on looming TPAR deadline
How to read a Balance Sheet
Unregistered or Registered Trade Marks?
Most Popular Operating Systems 1999 - 2022
Articles archive
Quarter 3 July - September 2024
Quarter 2 April - June 2024
Quarter 1 January - March 2024
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 2 April - June 2007
Quarter 2 April - June 2006
Landlords who ‘double dip’, fudge deductions in ATO crosshairs

The Tax Office has warned taxpayers to revise deduction rules and maintain proper records.



.


Landlords who make false deductions by “double dipping” and incorrectly claiming capital expenses and interest on loans will face increased scrutiny this tax time, the ATO has warned.


Assistant commissioner Rob Thomson said most landlords were also guilty of keeping insufficient records that failed to substantiate the expenses they claimed.


“Rental property investments and taxation can get tricky … if you use a tax agent, make sure you let them know all about your rental property, including full records of your expenses,” he said.


 

The ATO’s warning comes after it found nine out of 10 landlords were making mistakes on their returns, announcing that rental income would be one of three key focus areas for tax time.


The other focus would be incorrectly claimed WFH deductions incomplete tax returns, the ATO said last month.


The most common mistake among landlords was misunderstanding what expenses could be claimed and when, especially for claims for repairs and maintenance compared to capital expenses.


 

Landlords should only claim deductions for costs incurred in generating rental income and it was a “myth” that all expenses could be immediately claimed, the ATO said.


“It’s normal for landlords to have to fix or replace damaged items in a rental property. But there is a bit of a myth that all expenses can be claimed immediately,” Thomson said.


“A repair can usually be claimed straight away but capital items, think dishwashers, curtains or heaters, can only be claimed immediately if they cost $300 or less, otherwise they need to be claimed over time.”


Landlords were often guilty of making “careless” capital expense claims which had to be claimed over time at a rate of 2.5 per cent over 40 years, with any unclaimed expenses added to the property’s cost base for CGT purposes.


Thomson also warned against landlords “double dipping” on expenses that property managers have already deducted from their total rental income, as landlords could only claim expenses they incurred themselves.


Another common deduction mistake was overclaiming interest in mortgages, the ATO said, estimating over one in four landlords reported incorrect interest expenses last year.


The ATO gave an example of a situation where taxpayers redrew or refinanced a loan for their rental property, used the money to pay for private expenses like a new car, school fees or a holiday, and then claimed the whole amount of interest charged on the investment loan for the year as a deduction. 


“For example, if you have an $800,000 mortgage for a rental property and then add $50,000 to the loan to upgrade your family car, you can only claim the interest on the initial $800,000, not the interest on $850,000,” Thomson said.


“It’s also not a matter of simply paying back the private part of the loan and then claiming all interest as deductible,” he said.


“Payments must be apportioned between the private and investment components for the life of the loan.”


 


 


 


 


Christine Chen
12 June 2024
accountantsdaily.com.au




12th-July-2024

Liability limited by a scheme approved under Professional Standards Legislation