April 4, 2018 by Dymphna

If you have a holiday home – read this!

ATO have a new campaign… and a new PR agency?

Word from the ABC is that the ATO is gunning for deductions on holiday rentals, particular when the property isn’t genuinely available to rent.

“The ATO’s assistant tax commissioner Kath Anderson said too many holiday home owners were claiming deductions for properties which were not genuinely available for rent or were only available to friends and family.

“While private use of a property is entirely legitimate, you can’t claim tax deductions for that period,” she said.

“What’s actually happening here is that the rest of us are effectively subsidising their holidays and their holiday homes.”

Ms Anderson said in one case a man who owned a property on Victoria’s Mornington Peninsula claimed $760,000 in deductions for a property used by either himself or family and friends for 87 per cent of the year.

“That included it being blocked out for their use in peak periods,” she said.

The man declared earning $27,000 income from the property, which Ms Anderson said was not reasonable, given the huge amount he claimed in deductions…

Ms Anderson confirmed many rental home owners also negatively geared their properties.

“About 80 per cent of taxpayers with rental properties claim interest on their loan and it makes up nearly half of all rental expenses,” she said.

She said the ATO’s crackdown extended beyond holiday homes to the general rental market…

Ms Anderson said some taxpayers claimed their property was available for rent, but when the ATO investigated it was clear they have had very little intention of renting it out.

“We’re seeing people not bothering to advertise or advertising in an obscure way,” she said.

“We see things like unreasonable conditions placed on prospective renters, rental rates set above market rates”…

The ATO warns it will use new technology and data matching to identify taxpayers who make incorrect or false claims.

“Where something raises a red flag, it will be investigated,” she said…

Wow. “ What’s actually happening here is that the rest of us are effectively subsidising their holidays and their holiday homes.” Easy comrade.

There’s a couple of things in this for me. The first is that holiday homes are in the ATO’s sights. They’re also keen to crack down on the practice of owning a rental property in an idyllic location so you can claim travel expenses for your beach-side holiday.

At the margin, these measures might take a little wind out of popular tourist markets.

But I also smell a PR exercise.

As Ms Anderson says, this review applies to the entire rental market, ensuring that rental properties are genuinely for rent.

So why not say that at the start? Why are we talking about holiday homes when they’re a tiny fraction of the market?

Why? Because it sells. The image of someone with a property plush enough to claim three quarters of a million dollars worth of deductions in a single year… that’s a rich fat-cat who obviously runs a child-slave racket.

Very hard to argue against making sure that evil bastard pays his fair share of tax.

And so expect to see more from this play-book from the ATO going forward. Launch a campaign to crack down on the investment property segment (the golden goose that keeps on giving). Sell it by explaining how it will make fat bastards on yachts pay more tax.


Evil. But genius.