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Ruling
Subject: Rental Property Ownership
Question
Are you required to declare rental income and associated expenses of the rental properties, where you have nil beneficial ownership from the date of a family law court order?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
The scheme commenced on
1 July 2011
Relevant facts
A family law court order that deals with the property settlement after your marriage breakdown states that from the date of the order, your ex-spouse shall be solely entitled to the whole of the beneficial ownership of particular rental properties and that due to their full beneficial ownership, they shall be entitled to receive all income, and be liable for payment of all outgoings, with respect to the units.
The court order also states that you have a certain period from the date of the court order to transfer the legal title of these units.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 8-1
Reasons for decision
The income/loss from a rental property must be shared according to the legal interest of the owners except in those very limited circumstances where there is sufficient evidence to establish that the equitable interest is different from the legal title.
In your case, there is a family law court order stating that from the date of the order, your ex-spouse shall be solely entitled to the whole of the beneficial ownership of particular rental properties and that in accordance with their full beneficial ownership, they shall be entitled to receive all income, and be liable for payment of all outgoings, with respect to the properties.
It is accepted that from the date of the court order, your equitable interest is different from your legal interest in the properties. Any income and expenses in relation to the properties after that date do not have to be declared by you as your equitable interest in the properties after that date is nil.