Time for extra care with taxation
The end of the financial year is imminent, and property investors have been warned by the Australian Tax Office (ATO) to take extra care in preparing their returns.
Property is a popular and lucrative investment for many Australians, generating billions in revenue and deductions.
Each year the ATO flags areas of special attention, and this year the rental income and deductions of property investors are in focus.
At a conference in Hobart earlier this year, tax commissioner Chris Jordan revealed that auditors found errors in almost nine out of 10 returns.
“We’re seeing incorrect interest claims for the entire investment loan where it has been refinanced for private purposes, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent,” he said.
Over 2.1 million Australian property investors claim more than $47.4 billion in deductions annually, against $44.1 billion of rental income.
The ATO offers guidance for investors to help navigate their returns each year. More than 85 per cent of investors utilise a specialist to help prepare their tax return; a further bulwark against errors.