ATO acting as Judge and Jury on this clause for short term rental and slapping common people want to build something as a Short term rental Host. In recent Audit, auditor was so bad and with a conversation dictated the outcome.
Hi @Jnil,
If you disagree with an audit decision, you have the right to object. You can lodge a formal objection to have the decision reviewed independently.
For short-term rentals, you can claim deductions only for periods when the property was rented out or genuinely available for rent. You can't claim deductions when you use the property privately, offer it to family or friends for free or at reduced rates, or place unreasonable conditions that restrict the likelihood of it being rented.
If you want to lodge an objection, you should provide supporting information that demonstrates your property was genuinely available for rent during the periods you claimed deductions.
As Rachel has indicated, you can lodge an objection. But note (and I don't know if any of this applies to you), there are a range of circumstances that would point to a property not being genuinely available for rent including factors such as:
1) The property being blocked out for private use in many of the peak periods such as Christmas, long weekends and school holidays
2) Restrictions on renting the property being unreasonably tight, such that it prevents people from renting it (ie 2 week minimum rental for example).
3) The property being in an area where it isn't realistic that anyone would rent it for short term use
4) The property isn't advertised widely and no real concerted effort is made to maximise the periods it is rented.
Or if records such as electricity bills show that the property is being used in periods when it was marked as "available for rent but not rented", that may be a red flag to an auditor as well.
Also, if it is rented at below market rates to friends and family, your deductions are going to be limited to the amount of the rent received.
But remember, any holding costs (interest, rates, insurance, repairs etc..) that are not claimable can still be added to the cost base of the property for CGT purposes, so ultimately you will still get a tax benefit from these costs, just at a later stage (and to a lesser degree, depending what ultimately happens with the CGT discount after the May budget...)
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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