14.03.2019 at 22:16
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ATO Targets 2.1 Million Real Estate Investors

The Australian Taxation Office will be targeting real estate investors who are incorrectly calculating taxes on their returns.

Chris Jordan, commissioner of the Australian Taxation Office (ATO), said they recently performed 300 audits on real estate investors and found that almost 9 out of 10 returns contained errors.

In a speech yesterday in Hobart, he said this is a problem.

"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."

More than 2.1 million Australians are property investors, who collectively claim more than $47 billion in deductions every year.

But rental income is only $44.1 billion. Mr Jordan believes something is obviously amiss.

"You can get a sense of the potential revenue at risk. A lot of people are getting things a little bit wrong, which adds up to a lot."

Mr Jordan said that after their close examination of work expenses earlier in the year, real estate investment would be their next big focus.

That earlier crackdown resulted in a decrease in average deduction claims for the first time in almost 25 years.

According to Mr Jordan, "The estimated revenue gain for [the last 2 years]  will be around $600 million."

That is for the work expenses. It is possible the real estate deductions will turn out to be an even larger matter.

"For those who are antagonistic towards us, and our reform program, who do not want to pay their share of tax, who see the ATO as something of an enemy, I believe community sentiment is against you and will increasingly become more so."

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