Nine in 10 landlords are getting their taxes wrong: ATO

Landlords looking to dodge their tax obligations have been put on notice by the ATO, thanks to new data matching technology.

The Australian Taxation Office is cracking down on landlords doing the wrong thing thanks to new data matching technology.

As part of the crackdown, the ATO says it will collect the rental bond data of about 2.2 million individuals from state and territory regulators in an effort to expand its data matching program.

Using this data matching policy, the ATO will be able to track landlords who do not disclose they own a property.

The ATO has announced they are further cracking down on landlords who are not paying their tax obligations. Picture: NewsWire/ David Crosling

The ATO said the data would be collected twice a year between 2023-24 and 2025-26 and be used to identify non-compliant landlords, promote voluntary compliance and improve risk models.

An ATO spokesperson told NewsWire the purpose of the program remains unchanged.

“The program helps us identify taxpayers who own an income producing property, and taxpayers who have sold an income producing property, who may not be meeting their reporting, lodgement or payment obligations,” an ATO spokesperson said.

The ATO also said the data matching technology also helps identify foreign residents owning residential property who may not be complying with foreign investment law.

According to the taxation office this is just one of a number of data matching systems the ATO uses to make sure landlords pay their tax obligations.

While the ATO is cracking down on landlords doing the wrong thing, they had previously revealed nine in 10 property owners are making a mistake on their tax returns.

“We also use a range of rental property data sets to proactively remind property investors of their tax obligations, so that they get their return right the first time they lodge and avoid mistakes,” an ATO spokesperson said.

The ATO say many landlords are overclaiming deductions. Picture: NewsWire / Emma Brasier

“The main mistakes rental property owners make are overclaiming deductions, not having the right records and not knowing what they can claim and when.”

The ATO said any rental deductions claimed must directly relate to earning assessable rental income.

“You need to have records, such as a receipt, which show how much you paid and what it was for to evidence your claims,” an ATO spokesperson said.

H&R Block director of tax communications Mark Chapman told NewsWire landlords were low hanging fruit for the ATO at the moment due to the number of mistakes being made on tax forms.

“Some of these landlords are deliberately getting their taxes wrong, but beyond that there are people who don’t understand the rules around property taxes,” he said.

“The laws around deductions are complex. You only have to look at whether something is a repair or an improvement as there is a whole ruling that goes on for pages on what is the difference.”

Mr Chapman said the message to taxpayers was clear as the ATO would be able to find those who did not comply with their tax obligations.

“The ATO has had a focus on property owners for a long-time but they have been able to ramp it up because of the data matching they are receiving,” he said.

“The most recent one is the state rental bonds, who are now providing information. It gives the ATO an oversight of the rental market which they can cross match with individual returns.”