The Australian Taxation Office (ATO) have expanded their data matching capabilities in relation to residential investment property loans, landlord insurance, income protection insurance and have also implemented the Sharing Economy Reporting Regime (SERR).
Designed to ensure taxpayers aren’t leaving out income or inflating deductions in their tax returns, the ATO has advised that data is being rolled in from property managers, landlord insurance policy information (both the premiums and claims), investment loan data and sharing economy providers, and income protection policy information. The longer-term view of the ATO is to have this information pre-filled into tax returns.
Residential investment property loans and landlord insurance
The ATO will be looking especially at loan interest claims to ensure that none of the interest claimed relates to private or personal purchases or financing. Refer to our previous article.
Interest is generally only deductible in relation to the original borrowing used to finance the rental property or on drawdowns in relation to structural improvements or repairs on the rental property.
Income Protection Insurance
The new income protection data-matching protocol was published in June 2023, meaning the ATO will know premiums paid for income protection insurance policies as well as payouts received.
The ATO advises that:
- You can generally claim a deduction for income protection insurance you buy, but this can’t be claimed as a deduction if the policy is paid by your super fund.
- If you receive an income protection insurance payout from either your personal insurance policy or from your super fund policy, you must include the income in your tax return.
Sharing Economy Reporting Regime (SERR)
The SERR started from 1 July 2023 and requires more electronic distribution platforms to report payment information to the ATO. This will come into effect in two phases:
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electronic distribution platforms that provide taxi services, ride-sourcing, and short-term accommodation must report income data from 1 July 2023
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all other electronic distribution platforms must report from 1 July 2024.
The information from platforms will be matched against what is reported in tax returns or activity statements.
Individuals can claim an exemption from capital gains tax (CGT) on the disposal of their main residence, but this exemption may be partially disallowed if an individual uses their main residence for income producing purposes.
The ATO has also advised that it will be paying attention in relation to taxpayers claiming the main residence exemption and in particular, situations where individuals are renting out their homes or part of their homes on platforms such as Airbnb or Stayz. The ATO will have access to information from these platforms as part of the second phase.
It would be prudent to speak to your advisor if you plan on, or already are, using your main residence for income producing purposes so adequate strategies can be put in place prior to ensure you can plan for the CGT on the eventual sale of your property.
More Information
A Moore Australia advisor can assist to ensure you are including the correct amounts for claims and deductions.
The full media release can be found on the ATO website.