Tax Accounting: Why Rental Property Expenses Were Denied

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    Why Documentation Is Critical To Taxation Expense Claims

    In an Administrative Appeals Tribunal judement (AATA 174) the case was heard regarding whether certain outgoings incurred by a taxpayer were deductible rental expenses.

    During the 2007 year, the taxpayer originally claimed $6670 in expenses for maintaining the property. Later, the assessment was amended and the taxpayer increased the claim by $5208.

    The ATO denied both the original claim and the additional amount, because the property did not earn any rental income during that period, and determined the property was not available for rent.

    The tribunal found against the ATO, that the property was available for rent, which was a win for the taxpayer. However, the taxpayer could only substantiate with receipts $100 for lawn mowing, $245 for insurance and $102 for advertising.

    Approximately 80% of all cases are lost with the ATO due to a lack of substantiation. It is crucial that clients maintain proper records and document decisions appropriately.

    Travis Allen CPA

    Hillyer Riches are Melbourne Accountant with over 20 years of experience. Contact us today to find out how we can assist you.

    For more information email This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.

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