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AHA welcomes ATO crackdown on short-term rental income

Listings on short-term property rental sites such as Airbnb will be financially scrutinised by the ATO.

Australian taxpayers either inadvertently or maliciously neglecting to accurately declare taxable income through listing vacant properties or rooms on Airbnb will be under the microscope as part of a newly launched crackdown by the Australian Tax Office (ATO).

Announced today, the ATO will examine data from short-term rental platforms and their financial institutions cross-matched with information from State and Territory Bond Boards and ATO records to more closely identify gaps and discrepancies in income reported and deductions. The review will cover the period of the 2016-17 financial year through to the end of the 2019-2020 financial year. It is expected around 190,000 Australians will be subject to the review, with those making errors given the chance to rectify their mistake without penalty prior to any action being enforced.

According to the ATO, rental income generated from sharing platforms such as Airbnb and others amounted to $42 billion in 2016. However, there was evidence that some taxpayers were making mistakes in declaring income from this practice and over-claiming deductions on items such as renovations or repairs. Should penalties be imposed on any individuals maliciously or knowingly short-changing the system, they could be as high as 75% of the tax shortfall, the ATO said.

Data collected will cover information such as income received per listing, dates listed as available versus dates actually available, enquiry and booking rates, prices quoted and charged and other information.

The ATO says anybody found erroneously reporting income from short-term rentals will have a chance to rectify their mistake penalty-free.

“The availability of short stay rentals has exploded thanks to the online revolution. With the growing number of homes, apartments, units and rooms available via accommodation sharing sites, there is a real risk some people may not understand their tax obligations,” said ATO Assistant Commissioner Kath Anderson.

Commenting on the announcement, the Australian Hotels Association (AHA) and Tourism Accommodation Australia (TAA) welcomed the move, saying it would increase equity between hotels and “the largely unregulated short stay accommodation sector”.

AHA and TAA Chief Executive Officer Bradley Woods said the move will make inroads to create a level of transparency in the taxation of unregulated short stay accommodation.

“As this unregulated sector has grown, traditional accommodation providers have suffered as a result of unequitable taxation arrangements whilst taxpayers have missed out on a substantial revenue stream.

“I congratulate the Commonwealth Government and the ATO for identifying this gap in information and source of revenue – this development is a welcome one for those in the regulated accommodation sector who make substantial taxation contributions to state and federal governments,” Woods added.

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