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ATO tightens rules on claiming holiday home expenses

ATO’s new approach to holiday home expenses

The ATO has announced that it will take a different approach to expenses claimed in relation to holiday homes.

Broadly, the ATO now takes the view that if a taxpayer’s rental property is also their holiday home, certain deductions relating to holding it will be completely denied (rather than apportioned).

Expenses relating to ownership and use of the holiday home (e.g. interest, rates and maintenance) will not be deductible unless the holiday home is mainly used to produce assessable income.

Whether a holiday home is used mainly to produce assessable income will be determined by considering a number of factors.

However, this will generally not apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025.

Need clarity on how the ATO’s holiday home changes may affect you? Contact Omnis in West Perth for tailored advice.

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Justin Flavel

Managing Director

Justin’s experience spans across 20 years in accounting, financial analysis and general business practice.

Although born and bred on the land, Justin’s interest was more in spreadsheets, ledgers, and finance which led him to attend university. In 1992, Justin graduated with a Bachelor of Business majoring in Accounting and Finance. As well as qualifying as a CPA member and becoming a Fellow of the Taxation Institute of Australia, he began gaining practical experience in small and mid-tier accounting practices.

During the late 90s, Justin decided to expand his horizons and travel through Europe. It was during this time that he seized the opportunity to expand his knowledge on the workings of large organisations by taking on roles in multinational corporations.

Today, Justin’s passion is in facilitating businesses to grow and evolve. His focus is on acting in the role of business mentor to help clients develop the full potential of their businesses. He joins clients on their unique journey, and provides the tools and knowledge they need along the way to make the right decisions.

Justin’s aim for his clients parallels his own philosophy and personal journey—focusing on his own career growth and business success while maintaining balance in his life with his wife and three daughters.

Omnis Group Managing Director - Justin Flavel