Rental Property Guidance, Refund Retention Updates & Payday Super

The ATO has released draft Taxation Ruling TR 2025/D1, providing guidance for individuals who earn income from rental properties, including short-term rentals and renting out part of their home. The draft ruling addresses:

• When rental income is assessable

• When losses or outgoings can be claimed as deductions

• How to apportion expenses when a property has both income-producing and private use

• When deductions for a holiday home will be denied because it is a “leisure facility” under section 26-50 ITAA 1997

The ATO acknowledges it has not previously expressed public views on how section 26-50 applies to rental properties. Taxpayers may have entered arrangements affected by these rules without realising it. As a transitional measure, the ATO will not allocate compliance resources to review whether section 26-50 applies to expenses incurred before 1 July 2026, where the arrangement was entered into before 12 November 2025.

The ATO has also updated Practice Statement PS LA 2011/22, which outlines the Commissioner’s discretion to retain a taxpayer’s refund. Section 6 has been updated to reflect the extended period within which the Commissioner must notify a taxpayer of a decision to retain an RBA surplus arising under BAS provisions, as amended by the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025.

Additionally, the Payday Super reforms have officially become law following Royal Assent on 6 November 2025 of both the Treasury Laws Amendment (Payday Superannuation) Bill 2025 and the Superannuation Guarantee Charge Amendment Bill 2025. From 1 July 2026, employers will be required to pay Superannuation Guarantee (SG) contributions within seven business days of each relevant payday, replacing the current quarterly payment model. The Bills amend the Superannuation Guarantee Charge Act 1992 and the Superannuation Guarantee framework to implement these changes.