December 2025 Newsletter

Please click on the following link to view this month's newsletter for December 2025. We would like to highlight the following articles:-

ATO releases draft guidance tightening holiday-home tax deductions

The ATO has released new draft guidance that may affect how holiday-home owners claim rental income and deductions. The updated rules focus on situations where a property is primarily used for private holidays, but significant rental deductions are still being claimed.

Under existing tax law, an “integrity rule” prevents deductions for expenses relating to assets that are mainly for personal use. The draft guidance clarifies how to determine when a property is considered a holiday home under this rule, and how to calculate allowable deductions.

The ATO outlines what it considers fair and reasonable methods for apportioning expenses between private use and income-producing use. For example, if a property is rented for half the year and used privately for the remainder, only around 50% of general expenses (such as interest, utilities and insurance) would be deductible. The guidance also addresses common scenarios, including renting to relatives or friends at below-market rates.

A new “traffic-light” risk framework identifies arrangements likely to attract ATO scrutiny.

Amber zone: Medium-risk situations where a property is genuinely rented but also heavily used by the owner.
Red zone: High-risk cases where the property is mostly used privately, and rental activity is limited or non-commercial. Claims falling in this zone are more likely to be reviewed or challenged.

Although the guidance is currently in draft form, the ATO intends to apply it retrospectively once legilsated, with transitional compliance treatment for arrangements in place before 12 November 2025.

Holiday-home owners should review how their property is being used, confirm their expense-apportionment method is reasonable, and maintain clear records of rental periods, vacancies and personal use. If you would like us to assess how these changes may impact your situation, please contact our office.

Payday superannuation becomes law from 1 July 2026

Parliament has passed the “payday super” reforms, replacing the long-standing quarterly superannuation guarantee (SG) payment system. From 1 July 2026, employers must ensure employees’ super contributions are received by their fund within seven business days of each payday (or within 20 business days in limited circumstances such as new employees or fund changes).

The reforms aim to reduce the billions of dollars in unpaid super identified each year, improve transparency for employees and allow earlier investment of contributions. They also provide the ATO with stronger tools to detect and enforce non-compliance.

Key features of the new law

SG must be paid every pay cycle (weekly, fortnightly or monthly), not quarterly.
Seven-day deadline for contributions to reach funds.
Strengthened SG charge rules, with interest and penalties applying more quickly and more heavily to late or unpaid contributions.
Simplified fund-choice and onboarding processes for employees.

ATO Small Business Superannuation Clearing House (SBSCH)

The SBSCH is being phased out:

closed to new users from 1 October 2025;
ceases entirely on 1 July 2026.

Small employers will need to transition to payroll-integrated super payment solutions, super fund clearing houses or commercial clearing houses.

What employers must do

Continue using the existing quarterly system until 30 June 2026.
From 1 July 2026, ensure super is processed each pay cycle and reaches funds within seven business days.
Review payroll systems for SuperStream capability and accurate SG calculations.
Prepare for changes to cash-flow timing, as super will now be paid more frequently.
Establish clear internal procedures for timely lodgement, monitoring of payments and correction of errors.

Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.