Edited version of private advice

Authorisation Number: 5010078352833

Date of advice: 25 November 2021

Ruling

Subject: Am I in business?

Question

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

Answer

Yes.

It is considered that you are carrying on a rental property business as the scale of your activities is significant and they are carried out in an organised and businesslike manner.

This ruling applies for the following:

XXXX to 30 June XXXX

Relevant facts and circumstances

You own and manage XXXX rental properties, which are leased to tenants, either as joint tenants or tenants in common. There is no formal partnership agreement, you are committed by marriage and work together in relation to the property management activities.

You are members of XXX Body Corporates in relation to your properties.

You provide an organised business office with an alarm and keep relevant records for all meetings and administration tasks, including rent collection. You provide a storage, and vehicles to complete maintenance work and visit tenants as required.

You advertise for new tenants through online portals and social media and complete the selection process for tenants, including residential tenancy agreements and associated documentation.

You monitor the financial accounts and assist tenants with how to pay.

XXX holds real estate qualifications. Professional development occurs through ongoing training, seminars and reading up to date relevant information.

You own and use a self-management tax program to record all accounts for tax purposes. Spreadsheets are kept on each property activities and yearly financial figures to project growth, identify shortfalls and where to improve financial gain.

You have extensive personal involvement in the activities and attend to all aspects of each property's management. You spend a significant number of hours XXXX on tasks and activities each week and have a set routine of job completion activities within specific timeframes.

There are daily meetings to discuss who is responsible for activities, maintenance, any issues foreseen, rent increases, new tenancies, prospective tenants.

Regular inspections of the properties occur XXXX times a year. Pest inspections and smoke alarm testing occurs as required. Lessees seek assistance for repairs / issues through access to your mobile numbers and email address. You provide phone access for tenants (including elderly tenants) when needing emergency repairs and /or help.

There are furnished and partly furnished properties.

You have short, medium and long term maintenance and financial goals for each property.

One of you will be transitioning at the end of the year from full time paid work as an employee to full time work on property managing, maintenance and repairs. The other has given up a full-time paid employment to improve the financial portfolio and manage the properties.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 995-1