The ATO is reminding rental property owners that each year it sees some fairly common mistakes being made with the claims made, and the tax outcomes that result, in regard to investment properties. It has therefore released a list of the top 10 stumbles, and how best to avoid them.

As a taxpayer, if you use your own car for work purposes, you can claim a tax deduction using one of two methods — the cents per kilometre method or the logbook method. If you use someone else’s car for work purposes, you can only claim for direct costs you pay for (such as the fuel used).

When a legal expense is incurred in relation to the operation of a business to produce assessable income, it is generally allowable as a deduction. Exceptions are when the legal fee is capital, domestic or private in nature, if it is specifically excluded by another section of income tax legislation, or is incurred in earning exempt and non-assessable non-exempt income.