The ATO has obtained extensive data on residential investment properties. The data is obtained from property managers, landlord insurance providers and financial institutions providing loans for residential investment properties, as well as income protection policy information. This data will be used to identify taxpayers with incorrect information in their tax returns and educate them. The ATO plans to pre-fill more information in future years.

In the ATO’s media release, they stated:

• Nine in ten rental property owners are getting their return “wrong”, eg interest from property loan refinance to purchase personal items is not tax deductible but insurance premiums paid for rental properties are tax deductible, while insurance payouts received in relation to an investment property must be reported as income.
• Income protection insurance purchases are generally deductible unless they are paid by the taxpayers’ super fund. However, income protection insurance payout must be included as income regardless of source of policy funding (ie self or super fund).

The release noted that the Sharing Economy Reporting Regime (“SERR”) commenced from 1 July 2023, following the passage of legislation in 2022. This requires more electronic distribution platforms to report payment information to the ATO. These areas have consistently been highlighted by the ATO as a major focus, so it is important you ensure your compliance.