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Edited version of your written advice
Authorisation Number: 1012675502720
Ruling
Subject: Board and lodging
Question
Are the payments you receive for board and lodging from your relative assessable income?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on
1 July 2013
Relevant facts and circumstances
You own a property which is your primary place of residence for taxation purposes.
You were residing in this property with your relative. During this time your relative paid you $X per fortnight.
You moved out of the property and moved into a unit.
Your relative is the only person residing at the property and they continue to pay you $X per fortnight.
You maintain full access rights and keep numerous personal items at the property.
The water connection for the property is in your name.
You continue to maintain the property as your mailing address and have all correspondence issued to that address.
You do not maintain records of payments, you have not provided receipts and no agreements have been made to formalise the arrangement.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that your assessable income includes income according to ordinary concepts. This 'ordinary income' includes amongst other things, income from salary and wages and business operations.
Taxation Ruling IT 2167 considers the assessability of payments for board and lodging paid by family members and states:
Arrangements of this nature, whether the payment is said to be for board only or for lodging only or for both, are considered to be in the nature of domestic arrangements not giving rise to the derivation of assessable income by the recipient of the payments. It follows that the question of income tax deductions for losses or outgoings does not arise.
In your case, we consider that the payments you receive from your relative are in relation to a domestic or social arrangement rather than a commercial transaction. Consequently, these amounts are not included in your assessable income.
Any losses or outgoings that you incur are not allowable as tax deductions under section 8-1 of the ITAA 1997 because you have not produced any assessable income.