ATO Prioritises Rental Property Income and Capital Gains

May 26, 2022

Beware, property investors: the Australian Taxation Office (ATO) has highlighted the four primary areas it will be focusing on this tax year, with rental property income/deductions and capital gains at the top of the priority list.

Tim Loh, the Tax office Assistant Commissioner, stated that this tax season, the ATO will be hitting four key problem areas where it often sees people making tripping up, including:

– rental property income and deductions;
– capital gains from property, shares and crypto assets;
– record-keeping; and
– work-related expenses.

“We know there are still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to,” says Mr Loh.

Related articles:

1. Rental property income and deductions

ATO Hit List: Rental Property Income and Capital Gains

If you own a rental property, it’s critical to report all rental revenue in your tax return, including short-term rental arrangements, insurance payouts, and any rental bond money you keep.

“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually,” explains Mr Loh.

He goes on to say that if the ATO notices a discrepancy, it may delay your refund since it will call you or your registered tax agent to fix the error.

“We can also ask for supporting documentation for any claim that you make after your notice of assessment issues,” Mr Loh adds.

For more information visit ato.gov.au/rental.

2. Capital gains from property, shares and crypto assets

If you sell an item this fiscal year, such as a house, stocks, or a crypto asset like non-fungible tokens (NFTs), you must calculate a capital gain or loss and report it on your tax return.

A capital gain or loss is the difference between the price you paid for an asset and the price you receive when you sell it.

“Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” adds Mr Loh.

3. Record-keeping

For those who are deliberately trying to increase their repayments, tampering with records, or unable to substantiate their allegations, the ATO warns them to take solid action this year.

If you are not in a hurry to file your tax return, it may be better to wait until the end of July as the ATO can automatically pre-populate a lot of information. Since the beginning of the

“We often see lots of mistakes in July as people rush to lodge their tax returns and forget to include interest from banks, dividend income, payments from other government agencies and private health insurers,” the ATO says.

Just note that not all information can be pre-filled for you, so be careful to double-check.

“While we receive and match a lot of information on rental income, foreign-sourced income and capital gains events involving shares, crypto assets or property, we don’t pre-fill all of that information for you,” adds Mr Loh.

4. Work-related expenses

ATO Hit List: Rental Property Income and Capital Gains

Since the beginning of the pandemic, many people across the country have moved to a hybrid work environment, with one in three Australians claiming homework in last year’s tax return.

“If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls,” says Mr Loh.

To claim a deduction for your working from home expenses, there are three methods available depending on your circumstances.

You can choose from the shortcut method (all-inclusive), fixed-rate method, or actual cost method, so long as you meet the eligibility and record-keeping requirements.

For more information visit ato.gov.au/deductions.

We’re around to help you this tax season

The end of financial year is a hectic time for all those working in the financial sector – and this includes mortgage brokers, as there are plenty of important June/July deadlines we can help you with.

That includes helping your business obtain finance to make the most of temporary full expensing before CoB June 30, and assisting potential first home buyers apply for the Home Guarantee Scheme come July 1.

So if there’s something you think we can help you with this EOFY period, please don’t hesitate to shout out – we’re here for you.

Need more financial advice? 

Browse our finance category. It’s chock full of hacks and advice from industry professionals. And remember to download the Soho app for quicker browsing and property matching. It’s getting you into your dream home faster!

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