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Edited version of your private ruling
Authorisation Number: 1012559778375
Ruling
Subject: Private arrangement
Question
Are you assessable on the income you receive from your parent as a boarder?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2014
The scheme commenced on
15 November 2013
Relevant facts
Your parent lives in a self-contained apartment under your house.
Your parent pays you a weekly amount for accommodation, utilities and the use of your car.
Similar accommodation in your area is more for the rent alone than the weekly amount you receive.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 provides that the assessable income of an Australian resident includes all ordinary income derived directly or indirectly from all sources.
Rental income is normally regarded as ordinary income and therefore forms part of the taxpayer's assessable income. However, where there is a non-commercial or domestic arrangement, amounts paid for board or lodging do not give rise to the derivation of assessable income (FC of T v. Groser 13 ATC 445; (1982) 65 FLR 121; 82 ATC 4478).
Taxation Ruling IT 2167 considers the consequences of different rental income producing situations. Paragraph 18 of IT 2167 states that:
Situations arise where the owner of a residence permits persons to share the residence on the basis that all the occupants, including the owner, bear an appropriate proportion of the costs actually incurred on food, electricity etc. Arrangements of this nature are not considered to confer any benefit on the owner. There is no assessable income and the question of allowable deductions does not arise.
In your case, the amount you charge is not considered to be a commercial rate as there is no built in benefit component to you for the use of part of your home.
Therefore, the arrangement is considered to be a non-commercial or domestic arrangement. The amounts you receive are not included in your assessable income and you are not entitled to a deduction for any expenses relating to the arrangement.
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