Airbnbers beware: The ATO is coming for property investors this tax season

property investors

The tax office is doubling audit numbers on rental deductions and has issued a warning to property investors after uncovering a nest of dodgy claims in a recent random sample.

Property owners omitting income from Airbnb and other accommodation-sharing schemes have been singled out as a particular area of focus as the ATO looks to crack down on tax rorts.

Assistant commissioner Gavin Siebert has cautioned property investors not to test their luck against the ATO’s increasingly sophisticated detection methods after more than $47 billion in rental deductions were claimed in financial year 2017-18 by some 2.2 million Australians.

“A random sample of returns with rental deductions found that nine out of 10 contained an error,” he said in a statement circulated yesterday afternoon.

“We are concerned about the extent of non-compliance in this area and will be looking very closely at claims this year.”

The ATO audited more than 1,500 taxpayers making rental claims in 2017-18, applying $1.3 million in penalties, including $12,000 for one person who claimed a deduction for a holiday home that wasn’t actually available for rent.

“This tax time, our message to taxpayers is clear. If you are renting out a room or a property, any money you earn must be declared as income and any deductions you claim may need to be apportioned for private use,” Siebert said.

Another taxpayer had to pay back $5,500 after failing to portion their rental interest deduction to take into account redraws on their investment for living expenses.

Siebert said audits on rental deductions will double to $4,500 this year, focusing on:

  • Over-claimed interest;
  • Claiming capital works as repairs;
  • Incorrectly lodging expenses for holiday homes lent to others; and
  • Omitting income from accommodation sharing.

Penalties can run up to 75% of whatever claim has been made and the ATO said it will scour through data from financial institutions, property transactions, rental bonds and online accommodation booking platforms to catch offenders.

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