To ensure fair play, the ATO expands data matching.

To ensure taxpayers don't understate their income or inflate their deductions this season, the Australian Taxation Office (ATO) keeps expanding its data-matching capabilities.

Property managers, landlord insurance providers, financial institutions offering loans for residential investment properties, sharing economy providers, and information about income protection policies are all currently submitting new data to the ATO.

According to ATO Assistant Commissioner Tim Loh, this isn't a guessing game, as our sophisticated data-matching programmes give us all the hints we need to find taxpayers who provided false information on their tax return.

"With a longer-term plan to pre-fill as much information as possible in future years," the statement reads, "we will use this information to identify and educate taxpayers who have made incorrect claims in their return." said Mr. Loh.

Loans for residential investment property and landlord protection

Nine out of ten owners of rental properties file incorrect income tax returns, according to the ATO's review of tax returns.

Mr. Loh confirmed the launch of two new data-matching protocols for landlord insurance policy data and investment loan data for investors in rental properties this year.

We find errors here because about 80% of taxpayers with rental income claimed a deduction for loan interest. For instance, you cannot continue to deduct interest expenses from your taxes after refinancing an investment property to pay for personal items like a trip to Europe or a Tesla.

The ATO is reminding taxpayers that insurance premiums paid for rental properties can be claimed as a tax deduction with the new landlord insurance data-matching protocol. In a similar vein, any insurance settlements connected with an investment property must be disclosed as income.

According to Mr. Loh, "This new data gives us crucial intelligence to paint a picture of what is true and accurate in tax returns."

87% of taxpayers who own rental property file their return through a registered tax agent. It is crucial that taxpayers give their agent the correct information so that the return can be properly prepared. Even when using an agent, taxpayers are still accountable for the information they include in their tax return.

SERR, the Sharing Economy Reporting Regime

An unprecedented number of taxpayers now hold multiple jobs or augment their income through side jobs or sharing economy ventures.

Beginning on July 1, 2023, more electronic distribution platforms will be required to report payment information to the ATO under the SERR. This will be implemented in two stages:

Taxi, ride-sourcing, and short-term lodging electronic distribution platforms must start reporting income data on July 1, 2023; all other electronic distribution platforms must start reporting on July 1, 2024.

Although the ATO has previously received data from a number of digital platforms, Mr. Loh stated that due to the legislative change, more platforms will now be required to submit reports on a regular basis.

"These new regulations will provide the ATO with clear visibility of people who are using these platforms to earn an income."

Platform data will be compared with what is stated in tax returns or activity statements.

Income security coverage

The ATO will be aware of the premiums paid for income protection insurance policies and the payouts received thanks to the new income protection data-matching protocol published this month.

In general, you can deduct the cost of income protection insurance you purchase, but keep in mind that if your super fund is paying for the insurance policy, you cannot deduct that cost.

"You must include the income in your tax return if you receive an income protection insurance payout from either your personal insurance policy or from your super fund policy," said Mr. Loh.

Guaranteeing a level playing field and safeguarding taxpayers who act morally is essential.

Our message is clear: We're not playing Guess Who with tax returns this year. We're here to help people file their taxes accurately the first time. said Mr. Loh.

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