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Edited version of private advice
Authorisation Number: 1052130653288
Date of advice: 29 June 2023
Ruling
Subject: Rental income - private arrangement
Question
Is the arrangement between you and your child to occupy Property A considered to be a private arrangement?
Answer
Yes. Your circumstances meet the criteria outlined in Taxation Ruling IT 2167 and is considered to be a private or domestic arrangement in nature. The payments made by your child are contributions toward the ownership expenses and not any form of reward therefore are not your assessable income.
This ruling applies for the following periods:
Year ending 30 June 2023
Year ending 30 June 2024
Year ending 30 June 2025
Year ending 30 June 2026
The scheme commenced on:
1 July 2022
Relevant facts and circumstances
You are self-funded retirees.
You reside in a leased apartment in a retirement village.
Your child is in the process of obtaining a divorce.
You entered a family agreement with your child in 20xx (Agreement).
The Agreement was entered with the intention of supporting your child during the divorce process and to assist your child in re-establishing residential and financial situation over the coming decade.
Under the Agreement, you agree using your own funds to purchase a residence to allow your child and grandchild and family pets to reside up to a 10-year period commencing from the date of purchase.
Your child is required to make weekly contribution to a saving account.
Any property expenses incurred by way of rates, land tax, insurance, ongoing maintenance, replacement of fixtures, equipment, carpets, blinds, painting and the like for the property will be financed from the account.
Your child meets their own costs for food, utility usage and other personal consumables.
No other person is permitted to reside on the property.
You purchased a property later in that year.
Your names are showing on the title as joint proprietors.
There have been no changes to the Agreement.
Your child has been depositing agreed contributions regularly into the account.
You will not be withdrawing amounts from this account for your personal use.
Relevant legislative provisions
Income Tax assessment Act 1997 Section 6-5