Two of the main targets will be illegitimate deductions for rental property – especially for holiday homes primarily used by family and friends – and people double-dipping on work expenses and/or making excessive claims.

Last year, the ATO contacted more than 350,000 taxpayers about errors or omissions in their returns. It expects to do the same this year.

Assistant Commissioner, Adam Kendrick told Fairfax Media that “every return is scrutinised as it’s lodged. More than half of the 350,000 taxpayers had claims checked last year because of basic errors such as misspelt names and addresses, wrong blank details or birth dates and the missing details of spouses.

There was also errors because, in some cases, the return had been lodged by the taxpayer before some of the pre-filled information given to the ATO by third parties was available.

“We’re encouraging taxpayers to ensure that all their pre-filled information is there before they lodge their returns,” Mr Kendrick said.

The rest of the 350,000 claims were knocked back because the individual had deliberately omitted or misreported income, especially investment income.

Each year, more than 600 million pieces of data are reported to the ATO, by third parties including banks, employers, health insurers, state and federal agencies and overseas treaty partners. The ATO cross-checks taxpayer returns with such information.

Work expenses, rental deductions under watch

Assistant Commissioner Graham Whyte said this year the ATO would look at work-related expenses across all industries.

The area being monitored was double-dipping: making work-related claims on your tax return when you had claimed them from work.

Excessive work-related claims – for example, claiming all your mobile phone bills and internet connections that are 90 per cent personal use but only 10 per cent work-related – and personal travel claimed as work travel would be monitored.

Mr Whyte said there were three checklists for taxpayers making such claims. “You must have spent the money yourself, it must be related to your job and you must have a record to prove it,” he said.

Income from renting out property would also be scrutinised, as would deductions for repairs and maintenance of such property. Holiday homes reserved for private use by family and friends would be under the spotlight.

“Realistic efforts need to have been made to rent out the property,” Mr Whyte said. “We will also be looking at rent that’s excessive; that is charged well above the market rate.”

Splitting income with a spouse was also a red flag. Mr Whyte said there had been instances where a husband and wife jointly owned a property but split the income and deductions unequally to gain a tax advantage for the highest income earner.

He said claims for repairs and maintenance shortly after the property was purchased might also be rejected. These would more likely be treated as a capital works deduction. It can only be claimed as a percentage of the cost, and over several years and interest deductions claimed for the private proportion of loans would also be dismissed.

Mr Whyte said the ATO recently found a case of a taxpayer borrowing on top of their existing loan to fund their daughter’s wedding but then trying to claim the whole amount of interest.

Mr Kendrick said the ATO had information on its website, including YouTube videos, explaining what people could and could not claim.

It would also be writing to owners of rental properties in holiday locations to make them aware of their obligations.