Late last year the Australian Taxation Office announced its intention to obtain details of property transactions dating back to September 20, 1985. Yes, you did read that correctly - the scope and amount of information they will be reviewing is huge!
During this program the ATO will source data from various sources including state revenue offices, land titles, residential tenancy boards and property agent rental records and will be data-matching against their own ATO records to check rental income, capital gains tax and stamp duty.
It is anticipated the program, set to continue in this way until June 30, 2017, will review 31 million records and 11.3 million individuals could be affected.
According to the ATO, "The purpose of this data-matching program is to ensure that taxpayers are correctly meeting taxation and other program obligations administered by the ATO in relation to their dealings with real property. These obligations include registration, lodgement, reporting and payment responsibilities".
The objectives are to ensure compliance with tax law, minimise risk to tax revenue and to gain a better understanding of how property is being used to minimise tax obligations.
With investment property holdings and transactions coming under such scrutiny, the importance of ensuring compliance in the accounting for investment properties is paramount. One way to minimise compliance risk, whilst maximising the result for your client is to ensure that capital allowances and depreciation have been accurately accounted for. It is worth mentioning that when it comes to accounting for rental property depreciation the ATO does not recognise accountants as having the appropriate qualifications to estimate construction costs and asset values. A tax depreciation schedule prepared by a qualified and recognised quantity surveyor such as Capital Claims Tax Depreciation is such a small investment when you consider the returns generated for the investor, as well as the mitigated risk of non-compliance.
Tips to help ensure your depreciation schedule is most likely to meet ATO compliance:
- Ensure your quantity surveyor is also a registered tax agent, accredited by the Tax Practitioners Board (this information is typically available on the business' website, or on a register accessible on the TPB website);
- Check if your quantity surveyor is a member of the Australian Institute of Quantity Surveyors AIQS;
- Make your own assessment as to the reliability and credibility of the firm by reviewing team profiles, experience and years in business (are they likely to be contactable in the event of a future audit);
- Shop for value, not the lowest price.
If you own an investment property, the best way to ensure your depreciation deductions have been maximised is to use a depreciation schedule prepared by Capital Claims Tax Depreciation. For an estimate of deductions you may be entitled to, or to have your current depreciation schedule reviewed free of charge, please don't hesitate to get in touch.
Mark is an expert quantity surveyor, business owner, public speaker and property developer. With 20+ years experience in the construction and quantity surveying industry Mark’s specialist expertise have been sought in consultant capacity by professional bodies such as the National Institute of Accountants and the National Tax and Accountants Association, and he has presented at various property and tax seminars and expos nationwide. Mark holds a Bachelor of Construction Management from the University of Newcastle, is an affiliate member of the Australian Institute of Quantity Surveyors and a Registered Tax Agent.View all posts by Mark Wilkins