Australian Taxation Office Released a Data-Matching Program to Eliminate Incorrectly Reported Rental Property Income and Expenses 

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The Australian Taxation Office (ATO) has recently announced a significant crackdown on residential investment properties in Australia by compelling banks to hand over data of 1.7 million landlords in the country.

ATO is trying to recover an estimated $1.3 billion in lost revenue from individuals who have yet to report rental income or claim deductions for their investment properties.

Under this initiative, the ATO can collect and analyse data from individual bank accounts with rental activity, providing greater transparency and accuracy regarding rental income reporting.

The ATO’s sample audit conducted in 2020-21 revealed that the federal government had missed an estimated $9 billion in revenue from individuals due to tax avoidance or errors. This included owners who under-reported their rental income, claimed deductions for properties they did not hold or failed to report capital gains from the sale of a property.

ATO said, “A significant driver of the gap is the incorrect reporting of rental property income and expenses. The rental component of the individuals’ tax gap is estimated to be $1.3bn.”

To combat the tax avoidance of individuals with residential investment properties, the ATO last week announced a data-matching program for the 2021-22 to 2025-26 financial years that will capture information on residential investment property loans.

This program will target both landlords and banks by collecting detailed transaction records of landlords’ rental income and expenses.

By introducing this data-matching program, the ATO hopes to make taxation fairer for all Australians and ensure that no individual can evade paying taxes on their residential investment properties.

ATO hopes to encourage greater compliance among taxpayers who own residential investments and improve the accuracy of taxation information used by the office for policy design and development purposes.

This effort is expected to lead to fairer outcomes for all Australians regarding residential property investments while increasing revenue generated from the sector.

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