Tax time always fun and while property investors are often happy with the potential tax credits they can get, it’s becoming a horror show for accountants with the increasing workload.
Today, we’ll discuss some essential tips to stay on the good side of the Australian Taxation Office (ATO) and avoid potential penalties.
The ATO is taking a closer look at rental property owners who may be incorrectly reporting their taxes.
According to their estimates, nine out of ten landlords are either under-reporting their income or over-claiming deductions, resulting in a staggering $1.3 billion in lost revenue annually – roughly $400 per investment property!
To address this issue, the ATO is collaborating with lenders and property managers, cross-referencing data to ensure that tax returns are accurate. So, what are the key areas they are focusing on?
Remember, failure to comply with the ATO’s requirements could lead to penalties of up to 75% of the tax shortfall – something no landlord wants to deal with!
Keep in mind that the ATO may request evidence to support your claims, so having receipts, invoices, and bank statements ready is crucial.
In case of an audit, you must be prepared to provide all relevant documentation.
By being diligent and adhering to these guidelines, you can ensure your tax returns are accurate, and you’ll be better equipped to avoid potential penalties.
I hope this help keep it smooth and worry-free!