A major tax crackdown has begun in response to a record number of Australians working side jobs, earning income from Airbnb, Uber, and other sharing economy services. In addition, thousands writing off their rental properties for tax purposes.
In the first quarter of 2022-23, the Australian Taxation Office has already started receiving information from taxpayers thanks to its new data scraping capabilities designed to ensure that taxpayers “do not leave out income or inflate deductions ”.
In future years, Tim Loh, ATO assistance commissioner, anticipates that all that information will be automatically filled in by bank accounts, property managers, landlord insurance providers, financial institutions that provide residential investment loans, sharing economy providers, digital platforms, and income protection policies.
“This isn’t a game of Guess Who, as our sophisticated data-matching programs provide us with all the clues we need to track down taxpayers with incorrect information on their tax return,” he said.
As of July 1, the Sharing Economy Reporting Regime (SERR) will commence, tracking activities on platforms like Airbnb and other providers. Platforms offering taxi services, ride-sourcing, and short-term accommodations must submit regular reports.
In the future, new rules on sharing data will apply to homes rented short-term.
Besides being required to provide regular information from all other electronic distribution platforms, the requirement will also extend to taxpayers working multiple jobs or earning multiple incomes, casting a wider net over the record number of taxpayers.
“While the ATO has received data from a number of digital platforms in the past, this legislative change means more platforms will be required to regularly report into the future,” Mr Loh said. “These new rules will give the ATO clear visibility of people who are earning income using these platforms.”
Approximately 17 banks are participating in ATO’s Residential Investment Property Loan (RIPL) data matching program, which targets landlords based on client identification data and transaction, account, and property details for the financial years 2021-22 to 2025-26.
According to experts, there are a number of “indisputable tax deductions” for landlords, including a depreciation schedule for investment properties, which could result in thousands of dollars being returned to landlords over the course of several years.
Among the mistakes landlords make, according to BMT Tax Depreciation CEO Bradley Beer, is claiming investment property costs as repairs rather than capital improvements.
“There are nuances when it comes to claiming work on investment properties, with differences between how a renovation and general maintenance is claimed at tax time,” he said.
“We know that two thirds of investment properties have undergone some form of qualifying renovation or addition completed by current or previous owners. This reinforces the importance of having a thorough tax depreciation schedule prepared by a specialist quantity surveyor.”
“Investors who have renovated and who fail to update their tax depreciation schedule before lodging their tax return risk both being out-of-pocket and facing the scrutiny of the tax office.”