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Edited version of private advice
Authorisation Number: 1051970006817
Date of advice: 11 April 2022
Ruling
Subject: Assessability of payment under a private agreement
Question 1
Is the $X amount to be paid to you to settle the agreement with the other party to the agreement, assessable income under Section 6-5 of the Income Tax Assessment Act 1997?
Answer 2
No, the$X amount to be paid to you to settle the agreement with the other party to the agreement is not assessable income under Section 6-5 of the Income Tax Assessment Act 1997.
Question 2
Are any of the amounts you have incurred for meeting operating costs under the deed an allowable deduction under Section 8-1 of the Income Tax Assessment Act 1997?
Answer 2
No, none of the amounts you have incurred for meeting operating costs under the deed are an allowable deduction under Section 8-1 of the Income Tax Assessment Act 1997.
This ruling applies for the following periods:
30 June 20XX
30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are the borrower under a deed executed in 20XX. You have included a copy of the deed with your application.
You are the child of X who is the lender in this arrangement. Your parent is the trustee in this arrangement. This structure was put into place to allow you and your partner to gain eventual ownership of the property.
You state in your application that under provision 1 of the deed, a trust was created where the trustee holds one of two equal moiety interests in land for the beneficiary for the property in question.
The trustee also holds an interest in the land.
The other lender in the arrangement is intending to pay you the sum of $X to release you from the conditions of the deed.
This was your and your partners main residence for the duration of the agreement.
The property has never been rented out since 20XX.
Relevant legislative provisions
Section 6-5 Income Tax Assessment Act 1997
Section 8-1 Income Tax Assessment Act 1997