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Tax office focusing on property investors

By Tamara Dalziel from Complete Property Centre rentals@completegroup.net.au

 

Landlords are advised to take extra care when lodging their tax returns this year, as property investors have been put on notice by the Tax Office that they will be one of the main groups being focused on this year.

 

The ATO has introduced new technology allowing them to cross reference property transactions recorded by state revenue offices against the rents and capital gains recorded in investor tax returns.

 

If investors fail to declare rental income or capital gains made for the 2006/2007 period or the tax office detect a shortfall between the income received and the costs claimed on a tax return, investors may find themselves under examination.

 

Some target areas will be -

 

*  Undeclared capital gains that are received on the sale of an investment property, including those sold for superannuation investment.

 

*  If you let a property or part of a property at less than normal market rates, this may limit the amount of deductions you can claim ie: discounting for family or friends, but still claiming the full deductions for expenses incurred on the property.

 

*  Expenses that are not related to the rental of a property ie: expenses connected to your own use of the property for part of the year or the property is only available for a proportion of the year, but claiming full deductions.

 

*  Expenses not actually incurred by you ie: excess water charges that have been paid by the tenant.

 

Terri Scheer Insurance offers a Tax Audit cover which is included in their Landlord Protection Policy.  It covers professional fees incurred in response to an investigation or audit of a Landlords financial or taxation affairs initiated by an authorised government agency in relation to the insured property and following the lodgement of a return, up to $1000.00 per audit.

 

This information has been sourced from the ATO website and Terri Scheer Monthly newsletter.

 

If you have any questions regarding Terri Scheer Landlord Protection Insurance please feel free to contact our office on 3257 2500 or visit the Terri Scheer website at www.terrischeer.com.au.