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Edited version of private advice
Authorisation Number: 1052221999806
Date of advice: 20 February 2024
Ruling
Subject: Rental income - domestic arrangements
Question
Is the income you receive from your son for board and lodging assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No. The payments you receive from your son are for board and lodgings. We consider these payments are in relation to a private or domestic arrangement rather than a commercial transaction.
Question
Will the Capital Gains Tax (CGT) main residence exemption apply under section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997) once the property is sold?
Answer
Yes. Based on the information you have provided you have met the eligibility conditions to claim the main residence exemption.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
XX XX 20XX
Relevant facts and circumstances
You own the dwelling located at the property.
You purchased the property after 20 September 1985.
The property is situated on less than two hectares of land.
You have treated the property as your main residence for the entirety of your ownership period.
The property has never been used to produce assessable income.
Your child also lives at the property and treats it as their main residence.
Your child receives a disability support pension from Services Australia.
Your child commenced receiving rental assistance from Services Australia on XX XX 20XX.
Your child pays you board and lodging each fortnight.
The funds are used entirely for food and utilities (gas, electricity, and water).
You have no formal arrangement in place.
You have a domestic arrangement with your child wherein they pay you board and lodging and you use the funds to facilitate their care and basic needs.
You have not reported any amounts on your tax return as rental income or claimed any rental deductions.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 118-110