Expense claims running to thousands of dollars for occasionally rented holiday homes fail the pub test and will fall foul of the ATO’s crackdown on property deductions, says assistant commissioner Kath Anderson.
Ms Anderson said rental property claims were high on the ATO’s hitlist for 2022-23 as it attempted to reduce the tax gap – the difference between what is collected and what full compliance would yield – down from $33 billion.
“The gap represents an unfair advantage that those not doing the right thing have over those who are doing the right thing. And in the context of a business, especially a small business, this unfair advantage can be significant.
“As you would expect, integrity and levelling that playing field will continue to be a high priority for us.”
The recent budget had delivered funding to extend the personal income tax compliance program for two years and, as well as rentals, omitted income and work expenses were also key targets.
Increasing digitization of ATO processes was a key feature of the compliance mission.
“In 2022-23, you’ll see us continuing to use data as much as we can. We’ll provide it in prefill and will harness advances in digitalization and data to provide more real time nudges and prompts for income and claims that seems to be a little bit outside of the norm,” she said.
“We’ve been delivering nudges and individual income tax returns for some time now, but we’re also starting to use nudges in relation to GST reporting by delivering those upfront messages for clients that are due to get a refund, just helping them to check their claims before they finish lodging.
“Enabling them to self correct where they’ve made an error removes the need for follow-up contact from us, which nobody likes.”
As of October, GST lodgment nudge messaging had resulted in corrections of about $57 million and approximately 400,000 individual income tax returns had been fixed up in real time before being finalised.
With lodgment deferrals at a record high number of almost 2 million over the past year, another ATO initiative should make the process smoother.
If you are behind with your lodgments or think you have made errors Sumz Plus Business Services can help you make it right and reduce penalties.
