Last week, the ATO released details about its new Residential investment property loan data-matching program for the 2021–22 to 2025–26 financial years. The ATO will acquire residential investment property loan (RIPL) data from financial institutions and use this information to identify individuals who may not be correctly reporting rental property interest deductions and net capital gains.
A significant driver of the gap is the incorrect reporting of rental property income and expenses, with the net tax gap for rental property expenses contributing $1 billion, or 14 per cent of the total individuals gap. A common reason driving the incorrect reporting of rental expenses is individuals incorrectly apportioning loan interest costs where the loan was refinanced or redrawn for private purposes.
One of the ATO’s strategies to reduce the tax gap is to increase the quantity and quality of the data it collects.
RIPL data will be compared with claims a taxpayer makes in their rental property schedules and rental tax return labels. The ATO will use this data to identify, assess and treat several taxation risks, including:
The ATO will use the data to execute strategies to:
RIPL data may be available to tax professionals through pre-filling reports in Online services for agents, and PLS through SBR.
The data may also be available to individual self-preparers through myTax, in particular the rental property schedule interest on loans and/or borrowing expense labels, and the rental income tax return label.
Inclusion of a data provider is based on the a number of principles, including that the entity operates a business in Australia and provides residential investment property loans to individuals. The ATO has identified that it may obtain data from the following financial institutions and their subsidiaries:
The selection of a data provider is principles-based. A financial institution that is not listed above may be included at a later time. The ATO will review the data providers annually against the eligibility principles.
The ATO will obtain the data under its formal information gathering powers in the tax law. As this is a coercive power, data providers are obligated to furnish the requested information.
Data of residential investment property loans held by individuals will be collected from financial institutions. The collected data may contain all or a selection of the fields listed below.
Loan account holder details
Loan account details
Loan account transactions
The ATO expects to collect data on approximately 1.7 million individuals each financial year.
See the ATO’s data-matching program protocol here.
See the Gazetted notice here.
See the protocol for the ATO’s property management data-matching program here — the ATO is collecting property management data for residential and commercial properties for the 2018–19 to the 2022–23 financial years.
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