The ATO is increasing its focus on holiday home investors and, in particular, whether they are correctly claiming deductible expenses says Stuart Wagschall of Thomas Davis & Co, Sydney accountants. His information is that excessive holiday home deduction claims make ATO hit list.
A key concern is when people make claims for expenses when the property was not available for rent.
Late last year, the ATO advised that it will be sending letters to taxpayers in approximately 500 postcodes across Australia, reminding them to only claim the deductions they are entitled to, for the periods the holiday home was rented out or was genuinely available for rent.
Holiday home investors should be aware that the ATO appears to be taking a broad approach in monitoring rental deductions. Where relevant, it may be prudent for holiday home investors to take this opportunity to review the rules surrounding holiday home tax deductions to ensure that any risks or issues are addressed in a timely manner. It may also be a good idea to review records now so that you are prepared should the taxman come knocking.