| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012491979570
Ruling
Subject: Foreign rental loss
Question and answer:
Are you entitled to include losses from a foreign rental property in your Australian income tax return?
Yes.
This ruling applies for the following period:
1 July 2013 to 30 June 2017.
The scheme commenced on:
1 July 2013.
Relevant facts and circumstances:
Along with your partner, you intend to purchase a property in another country (the property).
You intend to rent the property out and will make a rental loss on 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 losses from a foreign property
When a taxpayer earns rental income from a property, they are entitled to a variety of deductions for losses and outgoings associated with the earning of that income. These deductions are provided for by various sections of the tax law.
When deductions for allowable losses and outgoings in respect of a rental property exceed the income earned from that property, a net rental loss is made.
When the property concerned is a foreign rental property, the net income or loss from that property is declared against Item 20 (Foreign source income and foreign assets or property) in the supplementary section of the relevant income tax return (generally against Label R - Net Foreign Rent - although the labels may change from year to year) and is used to determine the total of the taxpayer's supplementary income for the year, which in turn is used to determine the taxpayer's total assessable income for the year.
Declaring a net loss from foreign rental property against item 20 in the supplementary income tax return has the effect of reducing a taxpayer's assessable income for the year in question.
Application to your circumstances
You will make a net loss from a foreign rental property. You are entitled to include your share of that loss in your Australian income tax return under Item 20 of the supplementary section of your income tax return.