The tax office was given a funding increase in the Budget so it could crack down on those who make false claims on their tax returns, angering a lobby group.
This month, Treasurer jim chalmers allocated an additional $89.6 million to the Australian Taxation Office to expand its Personal Income Tax Compliance Program.
While most of that funding will roll out starting in July 2025, the tax office will get more resources to crack down on tax claims starting in July of this year.
This will have tax officials targeting investing landlords renting a property, lazy Aussies making work-related claims copying and pasting last year’s return, and homeowners selling a property.
The tax office, in total, will receive $474.9 million in financial years 2025-26 and 2026-27.
The chairman of the Australian Taxpayers Alliance, Brian Marlow, who runs a libertarian lobby group, said the crackdown on the tax office was not justified and launched a petition against it.
“Workers are effectively squeezing the wallets of ordinary Australians who are already feeling the pinch,” he said.
The tax office was given a funding increase in the budget so it could crack down on ordinary Australians filing their annual returns (a file image is pictured)
What the tax office gets
The Australian Taxation Office will receive an additional $89.6 million over four years to bolster its Personal Income Tax Compliance Programme.
Since July 1, the tax office has been cracking down on investor landlords and Australians working from home.
Treasury budget documents argued that this was because tax breaks designed to help renters in the long-term rental market would not go toward getting homeowners to rent their homes short-term on Airbnb and Stayz.
“These measures will exacerbate the financial pressures Australians face every day, stifling economic growth and hampering our ability to recover from these difficult times.”
The tax crackdown is meant to hurt investors who have faced 11 interest rate hikes from the Reserve Bank over the past year.
But this is also in line with the fact that Australia has an ultra-low 1.2 per cent capital rental vacancy rate, which has seen a 20.7 per cent increase in weekly rental costs over the past year, according to data from SQM Research.
Treasury Budget documents announced that the tax office would have more resources to crack down on homeowners who listed their homes on the short-term rental market, with companies like Airbnb, only to claim deductions designed to increase the supply of long term leases.
‘This extension will allow the ATO to continue to provide a mix of proactive, preventive and corrective activities in key areas of non-compliance, and broaden the scope of the program to address emerging areas of risk, such as near-term related deductions. long-term rental properties to ensure they are actually available to rent,’ he said.
Last week, the tax office announced it would crack down on investor landlords because nine out of 10 were wrong in their claims by not including rental income.
Those who have a loss on a rental property can negatively affect it.
Treasurer Jim Chalmers this month allocated an additional $89.6 million to the Australian Tax Office so it could expand its Personal Income Tax Compliance Program (pictured left with his wife Laura)
ATO assistant commissioner Tim Loh said the tax office would target investors who claimed personal loan tax refunds.
“You can only claim interest on a loan used to buy a rental property for rental income – don’t forget that if your loan also includes a private expense, such as a new car or a trip to Bali, you can only claim an interest deduction for the production-related part of your rental income,’ he said.
Loh said that people who cut and paste from their previous tax return will also get caught up.
This follows a change to the work-from-home rules that only allows professionals to claim 67 cents per hour instead of the previous 80 cents.
“There have also been some changes to how things like work from home deductions are calculated, so don’t be tempted to just copy and paste last year’s claims,” Loh said.
ATO assistant commissioner Tim Loh said the tax office would focus on investors who claimed personal loan tax refunds.
“We know that a lot of people are working more in the office compared to last year.”
The tax office also targets homeowners and investors selling a property.
The family home, or someone’s principal place of residence, is exempt from capital gains tax.
But the tax still applies to investors, especially those who rented a home on the short-term rental market.
“If you’ve used your home to generate income, such as renting out all or part of it through the sharing economy, for example Airbnb or Stayz, or running a home-based business, then you can apply CGT,” Loh said.
Marlow said the tax bureau crackdown was more likely to hurt small business owners, with inflation running at 7 percent, or a level more than double the Reserve Bank’s target of 2 to 3 percent. .
“These measures, buried deep in Labour’s budget documents, will saddle you with higher taxes, at a time when the economy is struggling and the cost of living is skyrocketing,” he said.