If you earn an additional income from letting out part of your home on platforms such as Stayz or Airbnb, the ATO is now utilising new technology to make you are paying the right amount of tax on your earnings.

What is the ATO doing?

The latest technology investment from the ATO comes in the form of new data-matching software that will specifically target any Australian taxpayers who earn a supplementary income from offering short-term rentals in their homes.

There are nearly 200k individuals who use online platforms to rent out rooms or space in their homes. Utilising the latest software, they will be carefully checking to make sure that people have not undeclared or failed to declare rental income. It will also be used to make sure that people are not over-claiming on their personal tax deductions.

So, whatever information is held within the platform about your property rentals; this will need to match what you are declaring on the tax return. If needed, the ATO has the power to check what is coming in and out of your bank account too.

Guidance for Anyone Offering Short-Term Rentals

If you occasionally engage in short-term rentals, make sure you adhere to the ATO guidance as outlined below.

  • Make sure you keep records of everything – incoming and outgoing expenses for the space.
  • You will need to declare any income, even for a one-off situation,
  • If you are renting a room or property in order to earn revenue, you can claim a tax deduction for the cost of earning that income to recompense you for the efforts and time you put into that work.
  • Be aware that these activities could impact upon your eligibility to access the main residence CGT exemption on any sale of the property.
  • Any deductions are limited to the specific amount of income that you earn where the accommodation was offered below the present market rates, for instance, to friends or family.
  • If a deduction is claimed, it needs to be relative to the length of time the property or accommodation was rented out. For example, if you only rent out one room, then you can only claim a deduction that is relative to the expenses that are incurred to that portion, and only for the time, it was available.

In 2016, there are just over 2 million individuals in Australia that reported rental incomes of $42 billion. If you are contacted by the ATO, then you have 28 days to prepare and submit your response.