In November 2017, the government introduced new rules around tax deductions for travel expenses associated with residential property investments, and restriction of deductions for depreciation of items in residential rental properties, with a retrospective application from 1 July 2017.
"We are still receiving tax
returns from some tax agents where travel to residential rental properties has
been incorrectly included,” the ATO said in an online update.
"Landlords can
no longer claim travel expenses related to inspecting, maintaining or
collecting rent for a residential rental property, unless they are an excluded
entity.
"If we have
already processed your return and it included incorrect rental property travel
claims, you will need to lodge an amendment.”
H&R Block
director of tax communications Mark Chapman had earlier told Accountants Daily
that the changes have been a "hot issue” for clients, with most of
them oblivious to the new law.
Mr Chapman also
noted that there might be confusion on the ability to claim travel on tax forms
because the box still exists on returns.
"Some
additional confusion’s been caused, particularly in relation to the travel,
because if you actually look at the tax return, there is still a box there
where you can claim travel, even though the law says you can’t, and I think
that has tripped up some people,” Mr Chapman said.
Rental property
deductions have been a key item on the ATO’s radar, with Commissioner Chris
Jordan claiming that the agency’s audits of over 300 rental property claims found errors in almost nine out of 10
returns.
"We’re seeing
incorrect interest claims for the entire investment loan where it has been
refinanced for private purposes, incorrect classification of capital works as
repairs and maintenance, and taxpayers not apportioning deductions for holiday
homes when they are not genuinely available for rent,” Mr Jordan said.
"And when you consider that
rentals include over 2.1 million taxpayers claiming $47.4 billion in
deductions, against $44.1 billion in reported income, you can get a sense of
the potential revenue at risk.”
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Source: https://www.accountantsdaily.com.au/tax-compliance/12915-rental-travel-deduction-issue-remains-says-ato
Marlene Liontis
Thursday, 25 April 2019
