ATO eyes work expenses and rental properties

Cheating taxpayers making excessive work-related expense claims and incorrect rental property deductions will come under the microscope at tax time.

The Australian Taxation Office has sent a stern message to Australian taxpayers and said if they are falsely claiming deductions they are not entitled to they should "expect to get caught out and expect penalties."

The ATO's sophisticated data-matching systems will help scour through than 12 million tax returns this year and check up on 50,000 claims.

Adjustments of more than $100,000 have been made to several incorrectly lodged returns where taxpayers based rent costs that were below market rates or had not genuinely advertised their property for rent.

Sophisticated data-matching systems now allow the ATO to crosscheck more than 600 million transactions from employers, banks and government bodies.

ATO assistant commissioner Graham Whyte said it's "now easier than ever to identify discrepancies in returns."

"Anyone thinking of claiming a deduction they're not entitled to needs to understand they are running a big risk and will likely be caught and subject to outstanding tax and penalties,'' he said.

"It just doesn't make sense to try it on."

The ATO will pay close attention to excessive deductions claimed for holiday homes, husbands and wives splitting rental income and deductions for jointly-owned properties that are not supported.

They will also examine claims for repairs and maintenance immediately after a property has been purchased and interest deductions for private proportions of loans.

In 2012-13 more than 1.95 million taxpayers claimed rental expenses valued at $42 billion.

Work expenses will also be put under the spotlight - the ATO will examine claims that have already been reimbursed by employers and for private expenses such as travel from home and to work.

The Tax Institute's president Stephen Healey warned taxpayers to be careful of "pushing the boundaries" when claiming expenses come tax time.

"The increasing sophistication of ATO systems where the use of data matching to compare expenses is a significant piece of armoury in their arsenal,'' he said.

"Don't try to outsmart them because you are attempting to outsmart quite a sophisticated data-matching capability."

He said if you're not sure of your entitlements to seek professional advice from an accountant.

SOURCE:, June 2015

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