Find out the purpose and objectives of this program.
Program objectives
Our data-matching programs help us fulfil our responsibility to protect public revenue and maintain community confidence in the integrity of the tax and superannuation systems.
The objectives of the landlord insurance data-matching program are to:
- help ensure that individuals and businesses are fulfilling their tax and super reporting obligations
- identify and educate individuals and businesses who may be failing to meet their reporting obligations and help them:
- lodge their income tax returns
- correctly report rental income and expenses
- comply with capital gains tax obligations for properties used to derive income.
- gain insights from the data to help develop and implement treatment strategies to improve voluntary compliance. This may include targeted educational, behavioural or compliance activities for individuals and businesses that lease or let real property.
Why we look at this data
Sample audits across the Individuals (not in business) population were undertaken by the Random Enquiry Program. They reveal the tax gap for the 2020 financial year was $9 billion, or 5.6%. A key contributor of the tax gap is the incorrect reporting of rental property income and expenses, with the net tax gap for rental property contributing $1.3 billion, or 14% of the total Individuals gap.
Some common reasons driving the rental tax gap include incorrect reporting of rental expenses and income including insurance premiums, claim payouts, repair costs and capital works deductions. One of our strategies to reduce the tax gap is increasing the quantity and quality of the data we collect.
Landlord insurance data provides us information about rental property insurance policies including premiums paid and claim payouts received. We can use this information to identify, assess and treat several taxation risks, including:
- lodgment – confirming taxpayers with a rental property are lodging a tax return and their rental property schedule on or before the relevant due date
- income tax – confirming taxpayers with a rental property are correctly reporting rental expenses for landlord insurance, claim payouts and costs of repair in their rental property schedules
- capital gains tax (CGT) – calculation of cost base elements used to determine the net capital gain or loss on a rental property used to generate income.
For more information on your tax obligations when owning a rental property, see Residential rental properties.