Edited version of private advice

Authorisation Number: 1052034652974

Date of advice: 20 September 2022

Ruling

Subject: Am I in business - property management

Question 1

Are you carrying on a business as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. It is considered that you are carrying on a business of providing property management services to your spouse's rental properties business. Your business is separated from your spouse's business of rental properties. Your activity is undertaken on a continuous and repetitive basis for the purpose of profit. The activities are organised in a business-like manner, there is the keeping of records and the use of a system. Your business activities are characteristic of how ordinary businesses in the same industry are conducted.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

March 20XX

Relevant facts and circumstances

This private ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are different from these facts, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You retired from your senior management position.

You provide services for XXXX units and guest accommodation options at the main residence.

You do not own the units, they are 100% owned by your spouse.

Initially, you were earning small-scale money for your efforts. You set up an ABN to receive payment for your rental services provided across all properties.

Most of the units are rented long term and the remainder of the units are available for short term accommodation. (Fluctuations between long- and short-term accommodation occur particularly over the summer period, if a tenant leaves, the unit may be offered as a short-term accommodation).

The rental income from the apartment block units is paid into your spouse's bank account.

The property at XXXX comprises three floors. The flat under the main residence is self-contained, as is the short-term accommodation at the rear of the middle floor. The upper floor and most of the middle floor are used as residence.

In February 20XX, in addition to the existing flat under the main residence, a further room was configured for short-term accommodation.

Guests normally stay between three days and two weeks, but mostly 3-4 days.

Short term accommodation units are fully self-contained accommodation, all linen, crockery, white goods and furniture are provided. Bathroom and kitchen consumables including tea, coffee and milk are also provided.

Both short term and long-term accommodation are advertised through Airbnb.

The rental income from short term accommodation is paid the joint account between you and your spouse.

There is no partnership agreement with your spouse.

There is a business plan and home office.

You and your spouse have retired from paid employment. A property manager has not been engaged for X years regarding the units.

You spend approx. XX hours per week managing the properties.

Your short-term accommodation tasks include maintaining the Airbnb site, communicating with guests, greeting guests, cleaning and restocking of consumables.

Your long-term accommodation tasks include sourcing and interviewing prospective tenants, property inspections, cleaning, minor/major repair management and gardening. You assist with budgets and cash flow projections to assist with financial management of the properties.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 995-1