The Australian Taxation Office (ATO) is ramping up its compliance efforts in 2025, launching a major data-matching program to identify tax non-compliance among property investors. Over the next three years, the ATO will collect rental bond data from 2.2 million landlords, tenants, and property managers twice a year. This program specifically targets:
✅ Underreported rental income
✅ Unlodged tax returns
✅ Inaccurate deduction claims
With this heightened scrutiny, landlords who fail to maintain accurate records or meet their tax obligations could face audits, penalties, and unnecessary stress. Even minor mistakes—such as underreporting short-term rental income or misclassifying expenses—can trigger an audit.
⚠️ Common Mistakes That Trigger ATO Audits:
Incorrect Interest Deductions: Claiming interest on personal loans instead of those directly tied to the investment property.
Deduction Errors: Failing to apportion deductions correctly for properties that are only partially rented.
Unreported Incentives or Insurance Payouts: Rental incentives and insurance payouts for lost income must be declared.
Claiming Ineligible Travel Expenses: Travel deductions for property inspections are no longer allowed for most investors.
Misclassifying Repairs vs. Improvements: Repairs are immediately deductible, while capital improvements must be depreciated over time.
💡 Hidden Risk: Depreciation Oversights
One often-overlooked compliance area is property depreciation. According to BMT Tax Depreciation, 66% of investment properties have undergone renovations or upgrades, yet many landlords fail to claim their full depreciation entitlements—leaving thousands of dollars on the table.
Depreciation is one of the most valuable tax deductions available to property investors. However, claiming it accurately requires specialised knowledge of tax legislation and property structures. A registered quantity surveyor can prepare a comprehensive depreciation schedule that aligns with ATO guidelines, ensuring compliance and maximising deductions.
🛡️ 3 Steps to Stay Audit-Proof:
Accurately Report All Rental Income – Include income from short-term rentals and comply with non-resident landlord requirements.
Claim Eligible Deductions – Distinguish between repairs (immediately deductible) and capital improvements (depreciated over time).
Engage a Quantity Surveyor for a Depreciation Schedule – Maximise tax savings and secure documentation for ATO compliance.
🔔 Don’t wait for an audit notice! Now is the time to review your records and secure a professional depreciation schedule. Protect your investment and stay compliant.
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ATO Targets Property Investors: Are Your Records Audit-Proof?