Rental property owners to remain under scrutiny as ATO cracks down on taxpayers who either fail to meet their lodgment obligations or misreport rental information.
The rental bond data matching program and the property management data matching programs were extended in August 2024 to include the 2025-26 financial year.
To regulate the rental sector, ATO first commenced collecting rental bond information in 2005, with data collected dating back to 1985.
The main focus of these data-matching programs is to:
– Identify and educate individuals and businesses who may not be lodging their income tax returns, not correctly reporting assessable income from a rental property, not correctly reporting associated rental deductions and not complying with capital gains tax obligations for properties used to derive rental income
– Gain insights to help develop and implement strategies, which may include educational or compliance activities for individuals and businesses who lease or let real property, and
– Promote voluntary compliance and increase community confidence in the integrity of the tax and superannuation systems.
Errors that the ATO will be on the look-out for may include:
– Omission of rental income if you held more than one property
– Situations where the rental income declared in tax returns are not at the same proportion as the ownership documents
– Claiming an outright deduction for an asset that may have needed to be claimed over multiple years, and
– Incorrect cost base elements when calculating the rental property’s net capital gain or loss (for a capital gain event).
ATO compliance activity
The ATO has commenced issuing rental data-matching letters to taxpayers whose tax returns may not align with information reported by third parties. These letters are part of the ATO’s ongoing efforts to ensure the integrity of the tax system by identifying discrepancies in rental income reporting.
Contact us
Our focus is to ensure your accurate and timely compliance along with the best possible tax outcome, If you think there may have been misreporting of rental information in any of your previous tax returns, we can assist you in amending those tax returns.
We recommend reaching out to us promptly if you receive a data matching letter, we can assist you in reviewing your records and, if necessary, lodging any amendments or outstanding returns to ensure compliance with ATO requirements.
If you have any questions about these data-matching programs or would like to review your arrangements, please contact our office.
The team at EMspire Advisory are trusted, qualified Chartered Accountants, tax agents, and small business accountants. We work closely with our clients to achieve the best possible outcomes. To find out more, please contact us!
Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.