Mardi Heinrich and Nicole Woodcock explore two data matching programs targeting rental property owners launched by the Australian Tax Office.
A recent Australian Taxation Office (ATO) announcement may light some compliance tinder under those residential landlords and holiday rental owners who have not paid sufficient attention to their tax
On 10 August the ATO released details of two data matching programs that it will undertake in the period up to 30 June 2020. The ATO will obtain information from third parties under these programs, which it will then cross reference to data disclosed (or apparently omitted) from income tax returns.
The first program will seek to obtain detailed information from online accommodation rental platforms (including those operated by international entities) in relation to property owners who have used the platform during the 2016-17 to 2019-20 financial years.
The information the ATO is seeking will enable it to identify possible under-reporting of rental or hiring income. It will also highlight situations where a taxpayer may have claimed deductions for property-related expenses, but is not genuinely making the property available for hire or rent on an arm’s length basis.
The second program will additionally target disposals of real property which have not been disclosed for capital gains tax purposes. The ATO will seek rental bond information going all the way back to September 1985 (when tax on capital gains was introduced) in order to identify properties which may not be fully eligible for the main residence exemption.
There is some complexity in the capital gains taxation rules for residential real estate. A property that has been a taxpayer’s exempt main residence, but is subsequently rented out, can lose its fully-exempt status if its use as a rental property covers a continuous period of more than 6 years.
This initiative by the ATO is further evidence of government and regulators getting serious about tackling the non-criminal elements of the black economy.