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Edited version of your written advice
Authorisation Number: 1051295303819
Disclaimer
You cannot rely on this edited version in your tax affairs. You can only rely on the advice that we have given to you or to someone acting on your behalf.
The advice in the Register has been edited and may not contain all the factual details relevant to each decision. Do not use the Register to predict ATO policy or decisions.
Date of advice: 19 October 2017
Ruling
Subject: Interest Expenses
Question
Are you entitled to a deduction against your assessable income for the rent you pay?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 2017
The scheme commences on:
1 July 2016
Relevant facts and circumstances
You sold a house you lived in and put the money from the sale into your bank account.
You are earning interest income on the savings in your bank account.
You are renting a property with your family.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature.
In your case, you placed the money from the sale of your house in a bank account, and you wish to deduct the rent you pay from this income.
The payment of rent for a place to live is a private expense and therefore not deductible. Further, there is no connection between paying private rent and the earnings of interest income or salary income.
You state that if you used your deposit to purchase an investment property instead of trying to buy your own home, the rental income would be recognised as income, and the interest expense on the loan as an expense; if the expenses exceeded the rental income the loss would be offset against salary. To be consistent and therefore fair to those that are locked out of the housing market due to unfair taxation policy, rental expenses should be offset against any interest income earned on savings.
We note your concerns, however, the tax law does not allow a deduction for rent you pay to be offset against bank interest. The Commissioner of Taxation has no discretion to change this as tax law is determined by the Australian Government.
You may wish to contact your local member of parliament to voice your concerns.
ATO view documents
Taxation Ruling TR 95/25
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