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Edited version of private ruling
Authorisation Number: 1011671331533
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fac sheet has more information.
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Ruling
Subject: Rental property income and expenses
Questions and answers:
1. Are you required to include in your tax return details of a property which is no longer being used as an income producing asset?
No.
2. Are you entitled to claim deductions for a property that is no longer being used as an income producing asset?
No
This ruling applies for the following period:
Year ended 30 June 2011
The scheme commenced on:
1 July 2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You have a property which you have been renting at a commercial rate to your parent.
Your parent has ceased paying rent.
Your parent is now living in the property rent free.
You pay all expenses associated with the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Rental income
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
As your property is no longer being used as an income producing asset you do not have any income to declare in your tax return once your parent ceased paying rent. All of the rent your parent paid should of course be included in your assessable income.
Deductions
Section 8-1 of the ITAA 1997 allows a deduction for all losses or 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, or relate to the earning of exempt income.
You are not able to claim any deductions associated with the former rental property such as upkeep and maintenance, interest on loan, rates etc which relate to the period after your parent ceased paying rent.
You are no longer deriving any income from the property as it is being used for a private purpose.