ATO Targets Rental Property Owners Over Reporting Discrepancies

The ATO has begun contacting rental property owners whose reported income and deductions may not align with third-party data. This renewed compliance activity follows the expansion of the ATO’s rental bond and property management data-matching programs, extended in August 2024 to include the 2025–26 financial year.

Heightened ATO Focus

These programs enable the ATO to compare taxpayer-reported figures with information provided by real estate agents, property managers, and state and territory bond authorities — helping to identify misreporting, educate investors, and strengthen voluntary compliance across the rental sector.

Data-Matching Expansion and Compliance Objectives

The ATO first commenced collecting rental bond data in 2005, with records dating as far back as 1985. The extended data-matching initiative aims to:

Identify and educate individuals and businesses who fail to lodge returns, under-report rental income, over-claim deductions, or neglect capital gains tax (CGT) obligations.
Develop compliance strategies informed by data insights, including targeted education or enforcement campaigns.
Enhance community confidence in the integrity of the tax and superannuation systems through improved transparency and enforcement.

Common ATO Findings and Red Flags

Rental property owners should be aware of key areas under scrutiny, including:

Omission of rental income, particularly where multiple properties are held.
Incorrect ownership proportions between reported income and title records.
Over-claimed deductions — for instance, claiming the full cost of depreciable assets instead of spreading deductions over their effective life.
Errors in cost base calculations when determining capital gains or losses on property disposals.

What the ATO Is Doing

The ATO is issuing rental data-matching letters to taxpayers whose lodged returns appear inconsistent with third-party data. These letters form part of the ATO’s broader compliance program designed to protect revenue integrity and encourage accurate self-reporting.

If you receive such correspondence, it’s important to act promptly — the ATO expects swift clarification or amendment where discrepancies exist.

How We Can Help

Our focus is on ensuring accurate and timely compliance while achieving the best possible tax outcome for our clients.

If you believe prior rental reporting may contain errors or omissions, we can:

Review your historical tax returns and property records.
Assist in lodging amendments or resolving ATO correspondence.
Advise on correct deduction and CGT treatment to prevent future issues.

If you have received an ATO data-matching letter, or wish to review your rental reporting arrangements, contact our office for confidential and proactive assistance.