TAX CRACKDOWN TARGETS HOLIDAY HOMES

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HOLIDAY homes are being targeted by the Australian Taxation Office as cheeky owners claim dodgy deductions for their properties’ private use.

The ATO says it is spotting a “large number” of mistakes and false claims as some owners let family and friends stay in their properties for free but still claim deductions.

Other owners say their property is available for rent but set unrealistic conditions or high fees because they have no intention of letting it out.

“It’s not OK to expect everyone else to pay for your holiday,” ATO assistant commissioner Kath Anderson said.

Ms Anderson said holiday homes were “a subset of a bigger problem” with rental properties, where deductions had been climbing sharply, and the ATO was using data matching and other technology to spot incorrect claims.

Australia has more than two million property investors and about 350,000 of them own homes in holiday destinations.

“You can only claim deductions for your holiday home if your property is genuinely available for rent,” Ms Anderson said.

“You cannot claim for times when you were using it for your own personal holidays or letting friends and family stay rent-free.”

One ATO investigation found a person with a holiday home reported $27,000 of rental income but claimed $760,000 of related tax deductions over two years. They had set unrealistic conditions such as long minimum stays and the property was unoccupied for 87 per cent of the time.

“There’s a significant penalty for those who are deliberately doing the wrong thing. For those who don’t realise, the penalties are less,” Ms Anderson said.

NDA Law managing director Andrea Michaels said penalties included paying back the tax shortfall, a fine of between 25 and 75 per cent of the shortfall, and being charged interest at 8.77 per cent.

Rental property owners are already facing a hit this financial year after the Federal Government banned tax deductions for travel-related expenses for almost all landlords from July 1, 2017.

This was aimed at stopping some people who cheated the system by claiming deductions while on private holidays, but it also includes any landlord who visits their property to check on it or do maintenance.

“You can’t claim travel for going to visit a holiday home,” Ms Michaels said.