Edited version of private advice

Authorisation Number: 1051934622944

Date of advice: 31 March 2022

Ruling

Subject: Are you carrying on a business of leasing rental properties

Question

'Am I carrying on a business of leasing rental properties?'

Answer

Yes,

Having considered your circumstances and the factors outlined above, we determined that your activity has sufficient size, scale, and permanency and that it is regular and repetitious. It is planned, organised and carried on in a business-like manner and is the same kind carried on in a similar manner to that of ordinary trade in that line of business. We accept that you are carrying on a business of letting rental properties.

This ruling applies for the following period

Year ended 30 June 2022

The scheme commences on:

1 July 2021

Relevant facts and circumstances

You own a single titled property which has several individual rental properties on it. These properties are available for short term, medium term, and long-term lease. They are fully furnished and have manicured gardens and lawns.

You have registered a trading name and have a Facebook page and a website.

Short term bookings are handled through Airbnb, your website, or other online referrals. Direct calls are diverted to individual mobiles. Check-in is handled personally when available, otherwise a key lock system is in place. Check-out is usually handled by the key-lock system. Any enquiries are generally handled by the on-site caretaker.

Long term enquires are initially handled by you and are then delegated to a real-estate agent. Long term stays have a lease agreement and tenants have exclusive possession and control of the unit for the duration of the lease.

You provide basic services for short term accommodation such has full linen, Wi-Fi, kitchen equipment such as tea or coffee and continental breakfast and post stay cleaning.

You do not provide dinner services however, you offer local referrals and recommendations. You also provide brochures and maps for local tourist attractions.

You engage in various duties in relation to this income producing activity which include bookkeeping, advertising, website management, and liaising with various stakeholders such as guests, caretaker, and the real-estate agent.

You also perform extensive repair and maintenance tasks. You consider yourself hands on owners and only call professional trades people when the job its outside your skill set.

You estimate that you spend on average approximately ten to twenty hours a week engaged in the above duties.

You have an on-site caretaker. His duties are to look after day-to-day operation of the grounds and minor maintenance tasks, odd jobs, public relations with guests and relay information back to you. They do not have set hours and it can vary depending on an array of conditions. They live on site and are remunerated for their services via a rent reduction.

You do not live on site. You are both engaged in non-related full-time employment and occasionally take time off or leave from your full-time employment to attend to the management and maintenance of the properties.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 995-1