The Australian Taxation Office (ATO) will use its data-matching capabilities to identify and analyse claims from short-term rental owners’ and will cross-reference information from online sharing platforms like Airbnb to pinpoint errors, omissions and deceit. The ATO will be looking at the income received per listing, listing dates, booking rates, prices charged and quoted.
According to the ATO, about 2.1 million Australians received rental income of $42 billion in 2016, and according to assistant commissioner Kath Anderson, these taxpayers warrant extra attention due to the sheer size and significance of the rental market on the domestic economy.
Further, investors are getting it wrong.
“The availability of short stay rentals has exploded thanks to the online revolution. With the growing number of homes, apartments, units and rooms available via accommodation sharing sites, there is a real risk some people may not understand their tax obligations,” Ms Anderson said.
“We are increasingly using data and technology to identify any missing income in your tax returns. This data will also identify taxpayers who use sharing economy rental platforms to list a property that is not genuinely available for rent in order to claim unwarranted deductions. There is no high-tech hideaway for rental income.”
She said that while the ATO is usually lenient towards mistake-makers, it will penalise those who make “deliberate attempts” to evade tax on rental income.
Penalties for errors or omissions can be as high as 75 per cent of the tax shortfall.
Ms Anderson said rental property owners should ensure they declare all income, even if it is a one-off.
“There is no such thing as a rental hobby,” the ATO said.
Additionally, deductions can only be claimed for the periods in which the property is actually available for rent or is rented out. Rental owners renting out a room of their own property can similarly only claim for the actual portion of the main residence used.
Owners need to keep accurate records and remember that costs for repairs, defects and deterioration existing on purchase or renovation costs can only be claimed over the years, not immediately.
The ATO’s focus follows June reforms, which will prevent short-term letters in NSW from renting out their properties for longer than 180 nights a year.