Image of someone filling in a tax return
ATO enhancing data-matching programs to crack down on property investors. Image: Canva
  • New data-matching protocols aimed at rental investors are being introduced
  • Investment property loan information and landlord insurance information will be collected
  • 9 in every 10 rental property owners are incorrectly filling in their tax return

The Australian Taxation Office (ATO) has announced that it has increased its data-matching capability, in a bid to help ensure that taxpayers correctly include all their income and avoid inflating their deductions.

“We are here to help people get their tax return right the first time, but our message is clear, we’re not playing Guess Who with tax returns this year.”

Tim Loh, ATO Assistant Commissioner

The ATO will now collect data from property managers, insurance providers, financial institutions that supply residential investment loans, sharing economy providers, and collect income protection policy information. This information combined with the ATO’s data-matching programs aims to ensure taxpayers are paying the correct amount of tax and miscalculations, rectified.

Majority of landlords get their tax returns wrong

According to the ATO, 9 in 10 rental property owners are incorrectly filling in their returns. It was also noted earlier this year that a $1.3 billion tax gap for the 2020 financial year was fueled by incorrect reporting of rental income and expenses.

“Around 80% of taxpayers with rental income claimed a deduction for interest on their loan, and this is where we’re seeing mistakes.

“For example, you can’t refinance an investment property to buy personal items, like a holiday to Europe or a Tesla, then continue to claim the interest expenses as a tax deduction.”

Tim Loh, ATO Assistant Commissioner

Due to this, new data-matching protocols will get underway, aimed at property investors.

Residential Investment Property Loan (RIPL) data will be collected from Australian financial institutions, allowing the ATO to have RIPL data for approximately 1.7 million individuals. RIPL data will comprise client details, loan account details, loan asset details, account transaction details and borrowing expense details.

Landlord insurance policy information will also be collected by the ATO.

The collected data will not only help to rectify any miscalculations but also help the ATO to design easier ways for taxpayers to complete their returns.

“We will use this information to identify and educate taxpayers who have made incorrect claims in their return, with a longer-term plan to pre-fill as much information as possible in future years.”

Tim Loh, ATO Assistant Commissioner

Other forms of data that the ATO will collect

The ATO will introduce a Sharing Economy Reporting Regime (SERR) from July 1st 2023 to ensure those who work several jobs report correctly. SERR will start collecting data from taxi services, ride-sourcing, and short-term accommodation, while other electronic platforms must start reporting from 1 July 2024.

The ATO will also be able to access data pertaining to income protection insurance.

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