In today’s electronic environment, the ATO uses computer assisted verification techniques to analyse records and makes extensive use of data matching to determine whether income is being under-reported (and deductions over-claimed) by comparing data obtained from third parties.
The ATO has recently launched two extensive data matching programs that will affect many property owners.
Pursuant to the rental bond data matching program, for the period from 20 September 1985 to 30 June 2020, the ATO will collect data from rental bond authorities in the different States and Territories on:
Such data collected (estimated to be about 1 million records per year affecting around 900,000 individuals) will be electronically matched with ATO data holdings to verify that rental income was correctly reported and/or that capital gains tax liabilities were correctly calculated and paid.
Pursuant to the sharing economy accommodation data matching program, for the period from 1 July 2016 to 30 June 2020, the ATO will collect data from:
individuals engaged in providing accommodation services through online accommodation booking platforms such as Airbnb (e.g. income received from providing short term accommodation); and
online accommodation booking platforms and financial institutions (e.g. payments made by these platforms to individuals who rented out accommodation for a short time).
Such data collected (estimated to affect about 190,000 individuals) will then be used to verify that individuals deriving income from providing accommodation services through these online accommodation platforms have correctly declared their income on their tax returns.
If you are deriving cash income from such sharing economy activities, please contact your Nexia adviser so that we can help you comply with your tax registration, reporting, lodgement and payment obligations as well as determine if the money earned should be subject to GST. Income derived through the sharing economy (e.g. Airbnb and Uber ride-sharing) must be declared on your income tax return.
Penalties and interest will be charged on the tax avoided. Penalties can be significantly reduced by making a voluntary disclosure to the ATO and in that event, the ATO is more amenable to arranging a debt repayment plan. The ATO is much less amenable to reducing penalties and arranging a payment plan if avoided tax is discovered during the course of an audit.
Our tax specialists are pleased to assist with any tax enquiries in relation to a whole raft of tax consequences affecting property transactions. For any questions or to discuss any of the above in relation to your personal situation, please contact Grantley Stevens or your Nexia Edwards Marshall Adviser.
The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.