What will the ATO be asking about your holiday home?

May 24, 2023

Taxpayers claiming deductions on holiday homes are in the ATO’s sights.


The Australian Tax Office (ATO) is more than a little concerned that people with holiday homes are claiming more deductions than they should.


The ATO has published the startling questions they will be asking to scrutinise claims:


  • How many days was it rented out and was the rent in line with market values?
  • Where do you advertise for rent and were any restrictions placed on tenants?
  • Have you, your family or friends used the property?

 

The main problem the ATO seeks to highlight is blanket claims for the holiday home regardless of the time the home was rented out or available for rent.


A holiday home with views over the ocean from the outside. There is a deck with a table and chairs.

Apportioning holiday home expenses


You will need to apportion your expenses if:

 

  • Your property is genuinely available for rent for only part of the year.
  • Your property is used for private purposes for part of the year.
  • Only part of your property is used to earn rent.
  • You charge less than market rent to family or friends to use the property.


Limiting deductions for properties not genuinely available for rent


The ATO has also indicated that deductions might be limited if a property is only made available for rent outside peak holiday times and the location of the property (or other factors) mean it is unlikely to be rented out during those periods.

 

The regulator is also likely to be suspicious if the owner claims that the property was genuinely available for rent during peak holiday periods but wasn’t deriving any income during those periods. This might indicate that the property was really being used for private purposes or that the advertised rental rate was unrealistic.


Demonstrating a property is available for rent


Whether a property is genuinely available for rent is a matter of fact. Factors that help demonstrate a property is genuinely available for rent include:


  • It is available during key holiday periods.
  • It is kept in a condition that people would want to rent it.
  • Tenants are not unreasonably turned away.
  • It is advertised in ways that give it broad exposure to possible tenants.
  • The conditions are not so restrictive that tenants are unlikely to rent the property.


If you have any questions, email us or phone our friendly team on 02 9899 3044.


A woman with grey hair and man with grey hair and a beard seated at a table looking at paperwork

BUDGET 2026-2027: Discretionary trusts – A new 30% minimum tax

May 13, 2026
One of the big structural changes in the 2026-27 Budget is the introduction of a minimum 30% tax on the income of discretionary trusts, effective from 1 July 2028.

BUDGET 2026-2027: Electric vehicle FBT – Full exemption phased out, 25% discount made permanent

May 13, 2026
Under the Budget, the full FBT exemption will be phased out and replaced with a permanent 25% FBT discount and existing arrangements will be grandfathered.
Business man in workshop looking at the camera with his arms crossed

BUDGET 2026-2027: Business measures – Write-off, loss carry-back and R&D reform

May 13, 2026
Budget business measures include permanent extension of the instant asset write-off, the reintroduction of loss carry-back and reforming the R&D Tax Incentive.
More Posts