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Edited version of private advice

Authorisation Number: 1051528700166

Date of advice: 16 July 2019

Ruling

Subject: Am I in business?

Question

Does your activity amount to the carrying on of a business?

Answer

Yes.

You meet the relevant factors contained in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? Further information about carrying on a business can be found by searching 'QC 31733' on ato.gov.au

This ruling applies for the following periods:

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

Year ended 30 June 2019

Year ending 30 June 2020

The scheme commences on:

1 July 2015

Relevant facts and circumstances

You purchased a property and converted it to accommodation.

You have an ABN and you operate in the food and accommodation services sector.

Accommodation details:

·         Main bedroom - King with en-suite (can be made up as two Singles). Plus single bed in the annex of this room for a third person.

·         Access to free Netflix is available in this room.

·         Other bedrooms - Queen beds (share main bathroom) plus fold out single bed if required.

·         Verandas with seating on both levels.

·         The kitchenette has a coffee machine, convection microwave, electric wok, sandwich maker, toaster, kettle, rice cooker and egg cooker, indoor-outdoor BBQ, Nutri-bullet, water bottles, keep cups, coffee grinder, coffee plungers, shopping bags, cutlery, crockery, bowls, serving dishes etc. condiments and a bar fridge.

·         Children three years old and under are free (high chair, backpack pram and a porta cot available).

·         Parking for one car is provided on-site.

·         Pets are allowed.

·         Minimum two night stay.

·         Discounts for week long and monthly stays.

·         No cleaning fee for bookings of three nights or more.

·         Extras: organic bathroom amenities, beach towels, cloths drying rack, grooming tools/products, free books for guests to take with them, along with magazines, diffuser and natural oils, fragrant candles, hairdryers and free washing and drying of laundry is provided on request. A guidebook is also provided.

You keep records of all booking on booking platforms and spreadsheets and have a contracted bookkeeper to manage your book including profit and loss statements for the company.

You have increased your profit margin over each year of operations.

You work on average 10 hours per week and the contracted cleaner works on average six hours per week.

Your tasks in operating the company include; managing all enquiries and reservations, liaising with cleaner and cleaning service, arranging or conducting meet and greets, interacting with guests during their stay, managing rates and yield, managing interface between different platforms and/or direct bookings, inspecting rooms prior to arrival, baking cakes and other items, picking up food orders and other supplies.

You list with multiple distributors and promote your business through industry networks.

You have a business plan which includes; company goals and objective, marketing plan, and growth strategy.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

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