Edited version of private advice

Authorisation Number: 1052381033763

Date of advice: 16 April 2025

Ruling

Subject: Am I in business

Question 1

Are you in business of renting properties for short-term accommodation?

Answer 1

It is considered that you are carrying on a short-term accommodation business, as you satisfy the factors of business in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? The scale of your activities is of a level that is indicative of a business. There is repetition and regularity of activities and a purpose of making a profit. The activities are organised in a business-like manner and is not considered a hobby.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You own several properties that were long term rentals but have been transferred to short term accommodation, this was done to increase profit and maximise return.

You are currently working part time and managing the properties.

You plan to reduce your work and focus more on the accommodation.

You are currently in the process of adding an additional property and have also investigated renting properties and using this as short-term accommodation.

You researched the geographical location and potential client demographic prior to changing to short term accommodation.

You did not create a formal business plan.

You have a separate transaction account for the activity and maintain all records and receipts to track expenditure and income via a software program.

The properties are currently available for booking via online booking providers. There is no minimum night stay for any of the properties, you have a variety of rates per property.

The booking providers take a commission on the bookings. There are no real estate agents or property agents involved in the activity.

You take part in all aspects of managing the short-term properties including:

                    Accepting or declining requests,

                    Setting the price for short or long term (3 nights or more) and nightly stays

                    All communications with the guests completing and responding to reviews,

                    Supply and payment of electricity, gas, internet/phone,

                    replacement of perishable goods and consumables such as tea, coffee and toilet paper

                    Lawn mowing/gardening,

                    Laundry and washing,

                    Repairs and maintenance,

                    Undertake inspections at changeover on average 3 times per week including replacement of perishable and consumables and cleaning.

All the properties are fully furnished including full linen, WI-FI, kitchen equipment, tea coffee and continental breakfast and post stay cleaning. The properties also have manicured gardens and lawns.

You have made improvements to the properties including fully furnishing all properties, updating the outdoor area, providing vehicle charging stations, adding items for babies and toddlers and in one property converting a living space into an additional bedroom.

There is no formal lease agreement between the guests and yourself apart for the terms and conditions provided by the booking providers.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 995-1

Income Tax Assessment Act 1997 section 26-31

Income Tax Assessment Act 1997 section 152-40

Income Tax Assessment Act 1997 section 152-10

Income Tax Assessment Act 1997 section 152-35