| Disclaimer 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 private advice
Authorisation Number: 1051803806018
Date of advice: 11 February 2021
Ruling
Subject: Rental income - assessable income
Question
Is the rental income assessable to you for the second dwelling located on the property that is not your main residence?
Answer
No.
Having considered your circumstances and the relevant factors, the Commissioner accepts that the beneficial owners are different to the legal owners of the property. You have a legal ownership in the second dwelling however, not a beneficial ownership. Any rental income or rental loss that arises on the second dwelling that is located on your property will not be included in your assessable income. You can find further information on rental property and the division of net income or loss between co-owners at Taxation Ruling 93/32 Income tax: rental property - division of net income or loss between co-owners.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You purchased property in 19XX with 100% ownership. The property is more than 2 hectares. There was one dwelling on the property at the time of acquisition (dwelling one).
In 20XX you sold a portion of the property to an unrelated third party as a tenant in common. Your ownership interest changed to XX%.
The new owner moved into dwelling one as their main residence from their acquisition date.
You moved into the second dwelling (your main residence) built in 20XX.
Each dwelling is separate to each other and has its own ease of access.
Dwelling one was sold in 20XX to members of your family as tenants in common.
Your ownership percentage remained the same.
The members of your family are Australian citizens but are non-residents for Australian income tax purposes.
The members of your family acquired a loan, and you are named on the mortgage documents in the capacity as guarantor for security.
The second dwelling has been rented since 20XX. The rental income is paid to your family members.
You do not contribute to the mortgage repayments, nor receive any financial benefit from the rental income.
The rental income and loss associated to the second dwelling is declared by your family members.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 118-115
Income Tax Assessment Act 1997 section 118-130