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Edited version of private advice
Authorisation Number: 1051986965092
Date of advice: 26 May 2022
Ruling
Subject: Deductions - rental - income - domestic arrangement
Question
Are amounts received by you for having boarders in your granny flat included in your assessable income?
Answer
No, having considered your circumstances and the relevant factors we are satisfied that under section 6-5 of the Income Tax Assessment Act 1997 and referring to Taxation Ruling IT 2167 Income Tax: rental properties - non-economic rental, holiday home, share of residence, etc. cases, family trust cases the amounts received from your boarders are not assessable income.
This ruling applies for the following periods:
Year ended 30 June 20XX.
Year ended 30 June 20XX.
Year ended 30 June 20XX.
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You owned a property (the property).
The property has been your main residence for the entire period you have owned it.
The property has a granny flat attached to the dwelling under the same roof.
You had friends stay in the granny flat for varying lengths of time.
The granny flat was not advertised for rent, there were no formal lease agreements in place and there were no defined time periods that your friends would be staying in the granny flat.
Your friends paid you an amount on a weekly basis to stay in the granny flat.
The money paid to you by your friends was below market value for rental prices in your area and was considered to be a contribution to the costs of power, water and internet.
Due to Covid one of the friends stayed for a prolonged period of time.
You provided your friends some furniture and other general items depending on their needs.
You did not claim any deductions for any expenses you incurred on the property.
You sold the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5