November 29, 2022

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Over 2.2 million Aussies have been warned to keep a squeaky clean record as we begin to line up for tax season.

Landlords have been warned to keep a squeaky clean record as millions of Aussies line up for tax season.

According to experts the tax office is keeping an even closer eye on potentially dubious real estate claims in 2022.

Over 2.2 million Australians have rental property investments and claim a whopping $50 billion in deductions annually. That figure narrowly tops the $48 billion reported in rental income paid by tenants each year, according to the most recent taxation statistics recorded by the government.

Senior manager of tax policy at CPA Australia Elinor Kasapidis said the ATO has taken a renewed interest after the chaos inflicted by the pandemic on Australia’s taxation system.

“They will be scrutinising tax returns and the rental schedules. They’ll also be looking for things like undeclared income from renting out rooms or homes on a part-time basis,” Kasapidis said via the Nine Network.

“And that is because people have been over claiming or they’ve not been claiming correctly in the past.”

Kasapidis said it can get complex when investors choose to live in their secondary property for a portion of the year.

“Where sometimes landlords get into trouble, for example, is a holiday house where they or their close family might actually use it for parts of the year. So, the ATO is really big on landlords making sure that properties were genuinely available for rent, they were on the market, before people can start to claim those costs,” she said.

“People are claiming expenses for periods when they’re actually using their house for themselves, or their friends, or family are using the house. That’s not OK. So it really is about making sure that you’re only claiming the parts that are associated with any rent.”

Around 80 per cent of Australians who lodge a tax return are expected to score an average of $2500, according to new research.

But with the cost of living skyrocketing, Aussies won’t be in the mood to splurge.

The research from Finder found that 12 per cent of Aussies – the equivalent to 2.3 million people – will use their tax return to pay for household bills amid the cost of living crisis.

More than one-in-four will use their refund to pay down debt – including mortgages, credit cards, buy now pay later debt, personal loans and HECS debt.

Alison Banney, money expert at Finder, said Australians were taking a cautious approach with their tax return this year.

“Inflation is quite high at the moment yet wages are staying low, and some families are really starting to struggle with the cost of living,” she said.

“Many people are looking to use the extra cash to stay afloat.”

She said where possible, stashing the extra cash in savings could be a good buffer against future uncertainty in the coming financial year.

“I’d recommend using the cash to add to your savings, consolidate debt or get your bills under control,” she added.

But the research revealed just 53 per cent of Australians plan to claim deductions this year, meaning nearly half may potentially be getting back less than they should.

With many Aussies working from home, 22 per cent will be claiming home office expenses this year, while one-in-five plan to claim their phone bills, while 20 per cent plan to claim their charitable contributions.

Originally published as Tax warning for 2.2 million Aussie landlords as ATO cracks down

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