Early in 2025 the Australian Taxation Office (ATO)announced that it would be ramping up scrutiny on landlords, launching a major data-matching program to uncover tax non-compliance.
Over the next three years, the ATO will collect rental bond data from more than 2.2 million landlords, tenants, and property managers twice annually, targeting under-reported rental income, missed tax lodgements, and inaccurate deductions.
With this heightened focus, landlords who fail to meet their tax obligations face audits and potential penalties. But there’s a way to stay ahead of the ATO’s compliance measures: ensuring your financial records, including a professionally prepared property depreciation schedule, are up-to-date and accurate.
The hidden risk for landlords
According to BMT Tax Depreciation, a leader in property depreciation services, 66 per cent of investment properties have undergone renovations or upgrades, yet many landlords fail to claim eligible deductions. This oversight could leave thousands of dollars on the table – and expose landlords to increased scrutiny during an ATO audit.
BMT’s Chief Executive Officer, Bradley Beer, explains “Landlords often overlook renovations made by previous owners or fail to document their own property upgrades. A detailed depreciation schedule ensures these deductions aren’t missed, maximising tax savings and providing the evidence required to satisfy ATO requirements.”
One recent landlord who utilised BMT’s services was able to claim over $20,000 in missed deductions after undergoing an audit. “A comprehensive depreciation schedule is a lifeline for landlords – it ensures compliance while delivering significant financial benefits,” adds Beer
How to stay audit-ready
With the ATO’s expanded data-matching program targeting compliance, landlords are encouraged to take proactive steps to avoid costly penalties:
- Report all rental income accurately—don’t overlook short-term rentals or non-resident landlord conditions.
- Claim all eligible deductions—from property repairs to depreciation of building structures and assets.
- Engage a registered quantity surveyor—only specialists like BMT can provide ATO-compliant depreciation schedules that will maximise claims.
Why a depreciation schedule is essential
A depreciation schedule allows landlords to claim deductions for the wear and tear of eligible building structures and assets, including renovations by previous owners. The report provides detailed calculations using two ATO-recognised methods (prime cost and diminishing value), helping landlords choose the approach that best suits their cash flow needs.
For example, capital works deductions allow landlords to claim 2.5 per cent of a property’s construction cost annually for up to 40 years, while plant and equipment deductions focus on assets like appliances and fixtures.
“The ATO requires evidence for every deduction claimed, and a professionally prepared schedule not only substantiates these claims but also reduces the risk of errors,” says Beer.
For nearly 30 years, BMT Tax Depreciation has been helping Australian property investors navigate complex tax regulations. With close to one million depreciation schedules completed, BMT’s expert team ensures landlords stay compliant while maximising their tax returns.
“Our goal is to make the process simple and stress-free for landlords, so they can focus on the benefits of property investment without worrying about compliance risks,” adds Beer.
The ATO’s crackdown is a timely reminder for landlords to review their financial reporting processes and take action to protect themselves. A professional depreciation schedule isn’t just a tax-saving tool – it’s a vital safeguard in an era of increasing scrutiny.
