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Edited version of private advice
Authorisation Number: 1052114874421
Date of advice: 8 May 2023
Ruling
Subject: Income tax - assessable income - rent
Question
Is the profit for letting part of the land for short term camping on weekends assessable as ordinary income?
Answer
Yes
This ruling applies for the following period:
Year ended June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
A property was purchased to be used for private purposes.
After purchasing the property, you have registered a portion of the property on an online booking app for the purpose of short-term stays by various occupants.
No amenities are provided, as the campers are required to be self-sufficient.
With each booking that is made you receive a portion of the booking fee.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Reasons for decision
Under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) ordinary income is referred to as income 'according to ordinary concepts'. This phrase is not defined under the legislation, but a large body of case law has developed to identify the factors that indicate if an amount is income according to ordinary concepts. Typical examples of ordinary income include salaries, wages, and proceeds of carrying on a business, rent, interest, and dividends.
Rental and other rental-related income is the rent and associated payments that are received or entitles to when you rent out your property. Rental income also includes associated payments that may be received when renting out part of your property through the sharing economy or short-term accommodation. Rental-related income refers to money that is received as part of the rental agreement this can include: bond payment, insurance payout and either a letting or booking fee.
In your case, you let out part of your property some of the time to provide space for camping for a fee. You charge per stay and no facilities are provided. These amounts for rent, letting fee, booking fee, or other associated payments are income and are assessable. As the amounts you receive are included in your assessable income, you may be entitled to claim deductions in relation to the letting arrangement.
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