In March, ATO Commissioner, Chris Jordan effectively issued a warning to property investors to be very careful and honest in their rental deduction claims. In particular, it is recommended that investors pay particular attention to loan interests and ensure that any loans were used to purchase, repair or improve the investment property or its contents.

He noted that of the more than 300 rental property claims audits that the ATO completed, the ATO found errors in almost 9 out of 10 returns.

" We're seeing incorrect interest claims for the entire investment loan where it has been refinanced for private purposes, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent ," said Mr Jordan in an address to the Tax Institute's national convention.