Private ruling: Beneficial ownership of property
Published: July 2012
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you liable to declare your portion of the income and expenses from your jointly owned rental property? | A1: Yes.

Relevant facts and circumstances: You and one other person are registered on the certificate of title of a property as joint owners. A relative purchased the property in the names of both yourself and the other person. The relative paid the deposit, legal fees, strata and council expenses, and all mortgage payments. You, the joint owner paid for some utility bills while you lived there for a short period of time. The property has been rented out for over three years, and is managed by your relative who declares the income and claims the expenses themself. You lived overseas from when the property was first rented until recently. You have signed a power of attorney to allow your relative to undertake all dealings with the property. Neither you nor the other joint owner has anything to do with the property income, outgoings, management or maintenance, all of which are managed by your relative.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision: Summary: Division of net income or losses between co-owners of rental properties Co-owners of rental property generally hold the property as joint tenants or tenants in common. The income and loss from a rental property must be shared in the proportion of ownership. Taxation Ruling TR 93/32 states that the net income or loss from a rental property must be shared according to the legal interest of the owners, except in those very limited circumstances where there is sufficient evidence to establish that the equitable interest is different from the legal title. A person's legal interest in a property is determined by the legal title to that property under the land law legislation in the State or Territory in which the property is situated. The legal owner of the property is recorded on the title deeds for the property issued under that legislation. As you have not provided any evidence to support that the equitable interest in the dwelling is different from the legal interest, you must include both the rental income received and outgoings spent according to your percentage of ownership as stated in the title deed of the property. The fact that you have given your relative a power of attorney to manage the property is a private arrangement which does not effect the income tax position in respect of the property

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