Tax Coffee Corner
by Hitesh Mohanlal
Welcome to this months tax coffee corner. It’s also where we take the latest tax and business developments and translate them from “ATO-speak” into something that resembles plain English.
So, basically, plenty of reasons to grab a coffee before you find out how the ATO is going to suck the life out of you and make your life a misery.
Deductions for rental properties that double as holiday homes
Owning a holiday home sounds wonderful. A place to escape to, enjoy with family and perhaps make a little rental income on the side.
From a tax perspective, however, the ATO is not quite as interested in the holiday part.
Where a property is a holiday home, it must be used (or held for use) mainly to produce rental income before the owner can claim expenses relating to its ownership and use.
If this requirement is not met, expenses that may be entirely non-deductible include:
• interest expenses;
• council and water rates;
• body corporate fees; and
• repairs and maintenance.
Where the property is used mainly to produce rental income but there is some minor private use—for example, a week or a few weekends in the off-season when there are no bookings—the ownership and use expenses must still be apportioned accurately to reflect the periods of private use.
In other words, just because the property is advertised for rent does not automatically mean all the expenses are deductible. The actual use of the property matters.
ATO alert: $21 billion in lost super
The ATO is urging individuals to check whether they have lost or unclaimed super, with more than $21 billion waiting to be reunited with its owners.
Super can become lost when an account is inactive and the fund cannot contact the member, often following a change of job, address or phone number.
It is worth checking whether you have old super accounts sitting around from previous employers. You may be pleasantly surprised—although unfortunately, finding lost super is generally more exciting than finding a forgotten $20 note in an old pair of trousers.
You can check for lost or unclaimed super through ATO online services.
ATO motor vehicle registries data-matching program
If you own a vehicle, you may want to remember that the ATO is interested in more than just your tax return.
The ATO is acquiring motor vehicle registries data from state and territory authorities from the 2026 to 2030 income years.
The information will be matched against ATO records to identify taxpayers who are not meeting their registration, lodgements, reporting or payment obligations across several taxes, including GST, FBT, fuel tax credits and income tax.
The data will also be used to support ATO compliance activities through modelling, risk profiling and case selection. In other words, they are spying on you.
Payday Super: keeping within the timeframe
Payday Super continues to be an important issue for employers.
Under Payday Super, contributions must be received by an employee’s super fund within seven business days after payday.
To help employers stay on track, the ATO recommends that employers:
For new employees, or where an employee changes their fund, employers generally have 20 business days to make the initial contribution.
The good news is that the ATO has stated that employers who genuinely try to comply will not be the focus of its compliance action during the first year of Payday Super.
That said, “I thought payroll had done it” is probably not the compliance strategy anyone should be relying on.
$1,000 standard deduction for work expenses
There has been some confusion surrounding the new $1,000 standard deduction for work-related expenses, so here is an important clarification.
The ATO has recently updated its Employees guide for work expenses to remind taxpayers that the new $1,000 standard deduction cannot be claimed for the 2026 income year.
From 1 July 2026, applying to the 2027 income year and later years, employees may choose either:
• the standard deduction for work-related expenses of up to $1,000; or
• a deduction for the actual work-related expenses they incur.
Taxpayers should continue keeping records for deductible work expenses incurred from 1 July 2026.
If, at the end of the 2027 income year, they choose to claim their actual expenses, they must have the required written evidence for those expenses.
So, despite the new $1,000 standard deduction, throwing away your receipts just yet may not be the best idea.
Final thought
As always, tax rules continue to change, and the difference between a deduction being available, partially available or not available at all can sometimes come down to the specific circumstances.
A little planning and good record keeping can therefore save considerably more time, money and frustration later.
Please note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
