In November 2017, the government introduced new rules around tax deductions for travel expenses associated with residential property investments, and restriction of deductions for depreciation of items in residential rental properties, with a retrospective application from 1 July 2017.
Speaking to Accountants Daily, H&R Block director of tax communications Mark Chapman said the new rules were a major “irritant” for taxpayers in 2018, many of whom were oblivious to changes.
“Both measures came into force in 2017 but many affected taxpayers only really got to grips with the implications when they came to do their 2017/18 tax return this tax time and discovered claims they were expecting to make were no longer available,” said Mr Chapman.
Mr Chapman had earlier said that many clients were confused by the new rules because there was still a provision to claim travel on a tax return.
“Some additional confusion’s been caused, particular in relation to the travel, because if you actually look at the tax return, there is still a box there where you can claim travel, even though the law says you can’t, and I think that has tripped up some people,” Mr Chapman said.
“The ATO have got a real focus on property investors at the moment. They believe that some property investors are claiming excessive deductions or claiming for things that they’re not entitled to at all.”
In November, the ATO expressed concern over possible slip ups, and called on tax agents to remind clients about the new rules.
“If your clients have already incorrectly claimed deductions for the cost of travel to and from their property in their 2018 tax return, they will need to request an amendment,” said the ATO.