partners for life

mp+ newsletter

get mp+ insights straight to your inbox


partners for life

The ATO’s rental property crackdown – a potential audit goldmine

Do you own a rental property? Off the back of finding that the vast majority of rental property owners are making mistakes on their tax returns, the Australian Taxation Office (ATO) is now scrutinising related deductions closer than ever. This has led to the announcement of increased audit activity, in order to ensure ongoing compliance and to snuff out over-claiming; which ultimately reduces the ATO’s revenue. Read on to find out what they’re looking for specifically, and how you can stay in the ATO’s “good books”.

What are the ATO looking for?

The ATO have outlined that in a random sample of rental property tax returns, 9 in 10 contained errors. Because of this, their efforts to ensure every taxpayer remains compliant has been broadened to undertaking a massive audit increase, with a view to identify incorrect ite`ms such as interest deductions; capital works expenditure being classified as repairs; accommodation sharing income being left out of returns; and the incorrect apportionment of expenses in relation to holiday homes that are also used to produce income. Another potential stumbling block for rental property owners comes in the form of recent rule changes regarding travel expenses. Generally speaking, you can no longer claim travel expenses in relation to owning a rental property, despite the fact that the option still appears on some tax forms. The end game for the ATO is ensuring that they get as close as possible to collecting all the revenue to which they are entitled, and one place for them to go is to tighten the screw on taxpayer’s who claim deductions on their annual tax returns.

What can you do to remain compliant?

The most important thing you can do to stay off the ATO’s radar is to keep your documents in order. This applies broadly to all tax matters, but particularly with rental properties now that it’s in the spotlight. For all the deductions you wish to claim, ensure first of all that you are entitled to claim it, and then ensure that you have the paperwork to back it up. After all, if the ATO comes knocking on your door, it’s that substantiation they’ll be looking for. Beyond this, don’t feel like you need to go it alone. Engaging the services of a tax professional can help you make the most of what you’re entitled to, and ensure that you aren’t slipping up anywhere. As they say – prevention is better than cure!

How can MP+ help?

Our property, tax, and accounting teams have years of experience working with rental properties, and know how to navigate Australia’s complicated tax system. From maximising your deductions, to setting up the right structures for property ownership, right through to investment strategies and coaching; we have the people and the knowledge to help you make the right choices.

Give us a call today on 08 9301 2200 or visit to get more information or to book a free, no-obligation consultation.

written by:

Prior to forming McKinley Plowman, Nigel specialised in management consulting and international accounting, enjoying success in Australia and in the United Kingdom. His extensive experience in management consulting, international accounting and innovative tax structures has been a major driver in the success of McKinley Plowman as well as the many businesses he has steered towards new levels. Nigel is dedicated to fast-tracking his client goals with cutting edge tax and business strategies. He is a member of the CPAs and the Taxation Institute of Australia and enjoys developing tax strategies that work well here and around the world.

Thinking about becoming a client?

Book your free, no obligation consultation right now via our online booking system or get in touch to find out more

Already a client and want to get in touch?

Send us an email via our enquiry form or give us a call today