Adrian Abbott, of Sydney Tax Advisory, and Gregory Ross, of Eakin McCaffery Cox, discuss the ATO’s renewed focus on landlords who have failed to disclose rental income. A previous Rental Bond data-matching program, in conjunction with other compliance activity, found more than 8000 cases where real property dealings had not been declared correctly and, raised an additional $161 million in revenue.
Landlords not disclosing rental income, having lodged a rental bond, are at risk. The Commissioner has, in exercise of powers to recover tax due, lodged a data matching notice for rental bonds that have been lodged from 20 September 1985 (the introduction of CGT) and up to and including the 2019 financial year.
Voluntary Disclosure
Taxpayers and their advisers need to rapidly think about a voluntary disclosure, where a rental bond has been lodged with a Government Agency and where either the sale of that property occurred subsequent to 20 September 1985 and has not been included as a capital gain, or the rental income has not been included within their tax returns.
The data matching applies equally for individuals, companies, trusts and other entities.
The Commissioner’s Notice is under Gazette – C2018G00633
Under “Guidelines on data matching in Australian Government Administration(2014) the ATO is able to acquire rental bond data from State or other Commonwealth Government agencies”.
The Tax Office will be obtaining rental bond data from the following sources: –
New South Wales Office of Fair Trading – Rental Bond Board
Residential Tenancies Bond Authority – Consumer Affairs Victoria
Tenancies SA – Consumer and Business Services
Bond Administrator – Department of Commerce
WA ACT Office of Rental Bonds – Access Canberra
What information is available to the ATO?
The list is a long one and includes: –
Landlord
– Name, address and birth date
– Contact details
– Rental bond number
Managing Agent
– Name and address
– Contact details
The Property
– Identifier for the rental property
– Full address
– Period of lease
– Commencement and expiration dates of the lease
– Amount of the rental bond being held
– Type of dwelling and number of bedrooms.
How far will the net spread?
The answer is to all states and territories in Australia. The expected number of individual records to be data matched will be in the order of 900,000 individuals.
ATO Objectives
While the ATO list a number of objectives for the data matching, one feels that the major objective is to catch non-compliant taxpayers, both in respect of the failure to report a capital gain on the sale of the property, or to properly account for rental income received.
Summary and the key lesson to be carried forward
– All taxpayers should review whether they have reported capital gains and rental income from properties held between 20th September 1985 to 30th of June 2019.
– In the event that there has been nondisclosure, then a voluntary disclosure is needed urgently.
– Upon lodging a voluntary disclosure, the penalties will be reduced by 80% and depending upon circumstances, there may be a reduction in general interest charge.
Adrian Abbott and Greg Ross are available to assist taxpayers and their tax practitioners in lodging such voluntary disclosures.
Information source – Notice of Data Matching Gazette – C2018G00633.
Wider implications
Readers should perhaps note that the issue overlaps in part with the ATO’s recent announcement on OnLine Share Accommodation–So you thought the Commissioner wasn’t watching which was the subject of a recent article by the writers.
The text of the paper is only a summary and discussion of particular facts and principles. It is not to be taken as legal or commercial advice as to any particular factual circumstances.
| Adrian Abbott LLB, BEc, FCIS, FGIA, FCA, CTA Chartered Tax Advisor Sydney Tax Advisory Adrian@sydneytaxadvisory.com.au www.sydneytaxadvisory.com.au |
Gregory Ross LLB Accredited Specialist Government and Administrative Law Eakin McCaffery Cox ross@eakin.com.au www.eakin.com.au |
You can also connect with Adrian Abbott via LinkedIn and Gregory Ross via LinkedIn and Twitter