ATO to Scrutinise Rental Property Market

From The Real Estate Conversation.

The Australian Tax Office is ramping up scrutiny of the rental property market in a bid to stamp out tax rorts, reports The Australian.

In one of a series of interviews with The Australian about ATO priorities, tax commissioner Chris Jordan said the ATO will be looking closely at the practise of declaring rented properties vacant. He said the tax office will go so far as to monitor real estate agent, electricity and gas records to identify fraudulent claims.

Over the last few months, the Australian Taxation Office has already investigated 100,000 rental properties to ensure they are not involved in black-market activity or misclaiming of negative gearing.

The size of the rental market in Australia means it must be watched extremely closely for rorts, said Jordan.

Jordan told The Australian that ATO data shows deductions claimed for rental property exceed the rental income earned for privately owned rental properties in Australia.

“In the rental income space, there’s $40.1 billion of income and $43.6 billion of expenses,” he said.

With the 2016 census showing that 11 per cent of Australian properties, or 1.1 million homes, were unoccupied, rental income in Australia should be much higher, said Jordan.

Jordan said he is concerned about the growing amount of rental income disappearing into the cash economy.

“It appears that many landlords are not declaring their rental income, and many more are overstating their deductions,” he told The Australian.

The ATO is already using data-matching to check if properties are unoccupied. For example, Jordan said the ATO can match utility records, such as for electricity and gas, against the addresses of properties that owners claim are unoccupied.

The Australian reports that from next year, auditors will begin approaching real estate agents to request information about landlords.

Author: Martin North

Martin North is the Principal of Digital Finance Analytics

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