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The Australian Taxation Office will be targeting 2.1 million real estate investors incorrectly avoiding tax on their returns.
A recent batch of 300 audits on real estate investors saw that almost 9 out of 10 returns contained errors, according to ATO commissioner Chris Jordan.
“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,” he said Thursday at a speech in Hobart.
More than 2.1 million Australian property investors claim more than $47.4 billion in deductions each year. But that’s against just $44.1 billion of rental income.
“You can get a sense of the potential revenue at risk,” Jordan told the Tax Institute’s National Convention.
“A lot of people are getting things a little bit wrong, which adds up to a lot.”
As such, he said that real estate investors would be the “next focus” of the tax office after their close scrutiny of work expenses earlier this year.
The recent work-related expenses crackdown saw the average deduction claim decrease for the first time in almost a quarter of a century – dropping about a $130 over the past two years.
“The estimated revenue gain for that same period will be around $600 million,” he said.
“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,” he told the crowd of tax agents.
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