2017/18 Tax Update: ATO focus on holiday home deductions


In March, we emailed you a link to the ATO's announcement about holiday home owners.

Further to this update, the ATO has recently confirmed that, while the private use of holiday homes by friends and family is entirely legitimate, such use reduces a taxpayer's ability to earn income from the property and will therefore impact (i.e. reduce) the amount of claimable deductions.

The ATO has clarified that holiday home owners:

  • can only claim deductions for a holiday home with respect to periods it is genuinely available for rent;

  • cannot place unreasonable conditions on prospective tenants/renters, set rental rates above market value, or fail to advertise a holiday home in a manner that targets people who would be interested in it and still claim that the property was genuinely available for rent; and

  • where a property is rented to friends or relatives as 'mates rates', can only claim deductions for expenses up to the amount of the income received.

Where property owners make claims disproportionate to the income which has been received, the ATO has indicated that greater scrutiny should be expected.

If you are in doubt about what expenses can be legitimately deducted for your holiday home, get in touch with us.

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