This article is general information only and does not constitute personal tax advice. Your circumstances, including ownership structure, residency status, and the specific facts of your property, will affect the outcome, and figures are based on current ATO guidance for the relevant financial year. For advice specific to your situation, speak with a Registered Australian Tax Agent.
If you own an Australian property jointly with someone else, and you are behind on your tax returns while your co-owner is either also behind or has never lodged at all, the two situations are legally separate but practically intertwined. The ATO assesses each owner individually on their share of rental income and any capital gain, so one person’s lodgement backlog does not automatically create a liability for the other. But because rental income, expenses, and eventual capital gains tax are all calculated by reference to ownership share, you cannot accurately complete your own return without the property’s full financial picture, which usually means some coordination with your co-owner whether either of you wants it or not. ODIN Tax works with jointly owned property cases across our expat client base every day, and this scenario, one owner lodging and one owner silent, is one of the more common structural problems we untangle.
TL;DR
- Each co-owner is assessed separately by the ATO on their share of rental income and capital gains; a co-owner’s non-lodgement does not create legal liability for you.
- You still need accurate figures for the whole property (rent received, expenses, loan interest) to correctly report your own share, so some cooperation with the co-owner is usually unavoidable.
- If the property is sold, a 15% Foreign Resident Capital Gains Tax Withholding applies to each vendor’s individual share of the sale price where a valid clearance certificate is not provided, so one owner’s compliance status can directly affect settlement for both.
- Lodging your own overdue returns first, on the facts you can substantiate, is generally the more defensible position rather than waiting on a co-owner’s timeline.
About the Author: This article is published by ODIN Tax, a Registered Australian Tax Agent that has prepared returns for 2,300+ Australian expats across 40+ countries, led by Tax Director Pau Lam, who has spent over a decade specialising in non-resident and jointly owned property tax matters.
How Does the ATO Treat Co-Owned Property When One Owner Hasn’t Lodged?
The ATO treats co-ownership as a collection of individual tax positions, not a joint one. Each owner declares their percentage share of rental income, claims their share of deductible expenses, and is separately liable for tax on that share. This means your co-owner’s overdue returns are their compliance problem, tracked under their own tax file number, and the ATO does not chase you for their share of unpaid tax or unlodged returns. What it does mean is that the property itself, its rent roll, loan statements, agent fees, depreciation schedule, sits at the centre of both returns. If your co-owner has not kept records or has let paperwork lapse, you may find yourself reconstructing figures from bank statements, property manager reports, or the mortgage lender, none of which is impossible, but it does add time to what would otherwise be a straightforward return.
Can You Lodge Your Own Return If Your Co-Owner Refuses To Cooperate?
Yes, and in most cases you should proceed rather than wait. Building on the point above, your obligation to lodge is personal and does not pause because someone else is uncooperative or behind. What changes is the effort required to source accurate numbers. Where a co-owner will not share records, common workarounds include:
- Requesting rental statements directly from the property manager or real estate agent, who will usually provide these to any registered owner on request.
- Obtaining loan interest certificates directly from the lender, since these are issued per loan account and often accessible to all borrowers.
- Using local council rates notices and insurance records, which are typically addressed to all owners.
- Making a reasonable, documented estimate where genuinely no other source is available, and noting the basis for that estimate in your own records.
A Registered Australian Tax Agent can request many of these documents on your behalf and lodge your overdue return, which removes dependency on co-owner cooperation, particularly where the relationship between owners is strained (a common scenario in separated or estranged co-ownership arrangements).
What Are the Penalty and Interest Implications of Catching Up Late?
A related but distinct question is what lodging late actually costs, separate from the co-ownership issue itself. The ATO applies a Failure to Lodge (FTL) penalty calculated per 28-day period the return remains outstanding, up to a maximum of five periods. Where the late return also results in unpaid tax, a General Interest Charge (GIC) applies on top, compounding daily on the outstanding balance until it is paid. These penalties and charges are calculated per taxpayer, so your co-owner’s separate non-lodgement generates their own separate FTL exposure; it does not add to yours. The practical upside for anyone catching up voluntarily is that the ATO’s general voluntary disclosure settings typically apply more leniently before any audit or compliance action has started, and disclosing overdue returns proactively commonly results in a meaningful reduction to penalties and interest charges. There is no dedicated amnesty scheme specifically for property-related backlogs, but the general voluntary disclosure pathway is available and is the mechanism most overdue-lodger cases rely on. Being behind is more common than most people assume, and the ATO’s own settings are built around encouraging voluntary catch-up rather than punishing it, so there is no reason to treat a backlog as something to be embarrassed about before addressing it.
Does a Co-Owner’s Non-Lodgement Affect Your Tax Residency Position?
Stepping back from the compliance mechanics, a separate concern for expats is what an unresolved jointly owned property signals about residency. Continued ownership and maintenance of Australian property is a factor the ATO weighs under the Resides Test and the Domicile Test when assessing whether your permanent place of abode remains in Australia. This applies to you individually based on your own circumstances, the property’s use, and your ties to it, not based on your co-owner’s lodgement status. But if the property itself has been left in administrative limbo, missing rental declarations, no clear record of who manages it, that ambiguity can complicate a residency determination that already turns on documented facts. Keeping your own share of the property’s paperwork current is one of the more useful things you can do to keep a residency position defensible, independent of what your co-owner does with theirs.
What Happens at Sale If One Co-Owner Is a Foreign Resident With Overdue Returns?
Building on the residency point above, the sharpest practical consequence of an unresolved co-ownership backlog surfaces at settlement, not during ownership. For the 2024-25 financial year, the Foreign Resident Capital Gains Tax Withholding (FRCGW) rate is 15%, applying to property sales regardless of price, and for jointly owned property this 15% is withheld against each vendor’s individual share of the purchase price if that vendor fails to provide a valid ATO clearance certificate. In practice this means one co-owner’s unresolved tax status does not affect the other owner’s withholding outcome, since it’s calculated per person, but it can still delay settlement logistics, as conveyancers commonly wait for all clearance certificates before finalising. When one owner’s returns are overdue, obtaining a clearance certificate becomes a prerequisite to settlement, so lodging well before a property goes to market removes this as a settlement risk entirely.
What’s the Practical Sequence for Catching Up?
Given all of the above, the approach that tends to work best is straightforward. First, gather what documentation you can independently, agent statements, loan certificates, council notices, rather than waiting on your co-owner. Second, lodge your own overdue returns based on your verified share, using reasonable estimates where necessary and documenting the basis. Third, if a sale is anticipated, apply for your clearance certificate early and separately from your co-owner’s process. Fourth, treat your co-owner’s compliance as their responsibility to manage, not a blocker to yours.
| Issue | Affects You Directly? | Practical Action |
|---|---|---|
| Co-owner’s unlodged returns | No, assessed separately | Lodge your own return regardless |
| Missing rental/expense records | Yes, indirectly | Request records from agent/lender directly |
| FTL penalties and GIC | Only on your own share | Use voluntary disclosure to reduce exposure |
| FRCGW at sale | Only on your own sale proceeds share | Apply for your own clearance certificate early |
Frequently Asked Questions
Does my co-owner’s overdue tax return affect my own ATO record?
No. The ATO assesses each owner’s tax file number and lodgement history separately, so their backlog does not appear on or affect your record.
Do I need my co-owner’s permission to lodge my share of the property income?
No. You are required to lodge your own return regardless of what your co-owner does, using your own share of income and expenses.
What if we disagree on the ownership split for tax purposes?
The ownership split for tax purposes generally follows the legal title unless a documented agreement states otherwise; this is a factual question that should be confirmed against title records rather than assumed.
Can penalties be reduced if I lodge voluntarily before the ATO contacts me?
Yes, voluntary disclosure ahead of ATO compliance action typically results in a meaningful reduction to penalties and interest, though outcomes depend on individual circumstances.
Will a co-owner’s non-compliance delay the sale of the property?
It can, since clearance certificates for FRCGW purposes are issued per vendor, and settlement typically requires all vendors’ certificates to be in place.
Should I use the same tax agent as my co-owner?
Not necessarily. Many jointly owning expats use separate agents, particularly where relationships are strained, since each return only requires your individual share of the figures.
About ODIN Tax
ODIN Tax is a Registered Australian Tax Agent built specifically for Australian expats and non-residents, part of ODIN alongside ODIN Mortgage. We have prepared returns for 2,300+ expats across 40+ countries, holding a 4.9/5 rating across 400+ verified client reviews. Our team, led by Tax Director Pau Lam, deals regularly with jointly owned property cases, including overdue lodgements, residency determinations, and Foreign Resident Capital Gains Tax Withholding on sale. Because tax, mortgage, and conveyancing sit under one group, we can coordinate a co-ownership catch-up with any property settlement timeline instead of treating them as separate problems.
If you are behind on returns for a jointly owned Australian property, or approaching a sale and unsure how FRCGW applies to your share, get in touch with ODIN Tax at https://www.odintax.com/ to get your lodgement back on track.
