Taxman to crack down on holiday home owners rorting the system

Rental home owners will come under scrutiny at tax time, with the Australian Tax Office (ATO) warning it’s cracking down on the high number of suspect claims made by those who use their own property for personal holidays.

Assistant tax commissioner Kath Anderson said the ATO would specifically delve into the many mistakes, errors and false claims being made on properties that were not actually available for rent, or which were only available to family and friends.

“You can only claim deductions for your holiday home if your property is genuinely available for rent. You cannot claim for times when you were using it for your own personal holidays or letting friends and family stay rent-free. It’s not ok to expect everyone else to pay for your holiday,” Anderson said in a statement.

“Holiday home owners also need to remember that if their property is rented to friends and family at mates’ rates, they can only claim deductions for expenses up to the amount of the income received.”

The assistant tax commissioner told ABC News that one man who owned a home on Victoria’s Mornington Peninsular claimed a staggering $760,000 in deductions for a property that either he or his family and friends had used for 87 per cent of the year, but that he had only declared $27,000 in rental income from the property. The ATO found his claim for deductions relative to the amount of rental income generated to be unreasonable.

Property owners like this man, whose claims are disproportionate to the income received, can expect scrutiny from the ATO, Anderson said, adding that new technology, data matching and other systems will allow the tax office to identify “unusual claims”. The ATO will also crack down on deductions for properties that are not rented or where the intention to genuinely rent out the property is suspect.

“We see things like unreasonable conditions placed on prospective renters, rental rates set above market rates, or failing to advertise a holiday home in a way that targets people who would be interested in it,” Anderson said.

Property owners were urged to double-check their claims before lodging their tax return, keep accurate records and be very clear as to whether their property has been rented or was genuinely available for rent.

“Be sure to keep accurate records of the income you receive from your rental property, expenses you incur, and evidence of the property being rented or genuinely available for rent at market rates. You should also keep records of who stayed at the holiday home and when, including the time you and your family stay at the property,” Anderson said.

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