Invest
Talking tax: The importance of understanding your obligations
Property investors may be good at researching where to buy, what their rental returns will be like and working how to get capital growth, but they often do so at the expense of considering any tax obligations.
Talking tax: The importance of understanding your obligations
Property investors may be good at researching where to buy, what their rental returns will be like and working how to get capital growth, but they often do so at the expense of considering any tax obligations.
On a recent episode of nestegg's sister brand podcast, the Smart Property Investment Show, acting assistant commissioner of individuals and intermediaries at the Australian Taxation Office Adam O’Grady spoke with host Phil Tarrant about some of the things property investors need to be thinking about with regard to their investments.
One of the biggest issues the ATO finds with property investors is that “people just don’t keep records of what’s happened and why, and when”.
In addition, the acting assistant commissioner flagged that when the tax office does review returns and audit property investors, more often than not, it sees simple mistakes or a lack of understanding of what an individual is or isn’t allowed to do with regard to investments in tax returns.
“The vast majority of people don’t deliberately go out to claim things they shouldn’t or obtain refunds,” he acknowledged.
“Those that do, finish up in front of the courts and prison.”
While some people are quick to lump these extra responsibilities regarding disclosure requirements with their accountant, Mr O’Grady said an accountant is “only as good as the information you provide them [with]”.
“They can really help you, make sure you’re structured in the right way and help you set up the proper recording requirements and all those sorts of things,” he offered.
“But, they can only do that if you’re open and honest with them.
“You need to talk to your accountant, explain what you’ve done, why you’ve done it, how you’ve set it up, and then they can give you that right advice.”
Mr O’Grady reiterated that “the majority of people, they want to try and do the right thing”.
But he flagged one of the real examples where people have recently tripped themselves up as relating to short-term rentals: “Where you can now rent out your house for two or three weeks when you go away, or you can rent out a room”.
“That’s all income that needs to be taxed – you need to report that through the tax system,” he said.
“But, a lot of people have jumped onto that as a way of earning extra income and didn’t really consider the tax implications of doing that,” he continued.
Not only is there the income component of such an arrangement, but Mr O’Grady said it changes the capital gains treatment of the property too.
His biggest piece of take-home advice to all investors, and especially those just starting out?
“Make sure you have an understanding of what the tax obligations are, and in particular keep all your records,” he continued.
“That’s really critical for you to understand and meet your obligations through the tax system.”
For anyone who is thinking about their potential tax obligations, Mr O’Grady touted the information available on the ATO’s website as ready to assist interested individuals.
“It’s not all the legal ins and outs, but it gives people a sense of what they should be looking at, [and] what they should be considering” on any investment journey.
“We want people to get what they’re entitled to... We want them to claim the expenses they’re entitled to claim,” the acting assistant commissioner said.
“But we want them to do it in the right way.”
RELATED ARTICLES
About the author
About the author
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
