Attempts to regulate AB+B’s customers via the tax system is littered with so many opportunities for lawyers to have a field day trying to define what is meant by say, the word “permanently”, as the OP wrote (in regards to “negatively gearing”, which as someone pointed out really refers to the right to offset expenses against the income generated via AB+B)
“But only if you permanently rent your property
Others over time, and Jimmy in this thread, suggest the ATO may go out and hunt down these short term lessors, many of which may be coy with just how much short term letting they are undertaking. I agree they will be coy.
Instead of defining “short term” with the aim of tackling short term hosts one by one, I think the ATO should look for the cheapest way to snare these self interested, self centred individuals and I suggest that would be to levy a tax not on the thousands of “hosts” but instead to levy a tax on the payments made by guests to the short term aggregation platforms such as AB+B, Expedia (under its garage of brands including, Vrbo, Vacation Spot, Stayz etc) and so forth.
Of course the platform providers will in turn sheet home this cost to the “hosts”, so mission accomplished.