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Edited version of your private ruling
Authorisation Number: 1012172611184
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Ruling
Subject: Assessability of rental income
Questions and answers
Are you assessable on the payments you receive from your child who lives in a property you own?
No.
Are you entitled to claim deductions for losses or outgoings in relation to the property?
No.
This ruling applies for the following periods:
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
You have a property that 1-3 of your children live in and pay below market rent of between one third to two thirds of market.
You have a key and access to the property at your discretion.
You store personal effects on the property.
You do not claim any deductions for this property.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Subsection 6-5(2).
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Taxation Ruling IT 2167 provides guidelines in determining the authenticity or otherwise of rental arrangements, the assessability of receipts derived from various rental arrangements and the deductibility of expenses incurred in connection with a property where the arrangement is not one that is affected at arms length.
In your situation, the payments you receive from your children are not considered to be rental income since it is a non-arms length transaction and is not at a commercial rate of rent.
Therefore, the payments received from your children are not assessable income. In addition, as the arrangement is private in nature, no deductions are allowable in respect of losses or outgoings incurred in connection with the property.
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