Private ruling: Property trust relating to rental income and expenses
Date of advice: 19 December 2018
Published: April 2019
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the rent received from leasing the property to the beneficiaries be considered assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Having considered your circumstances and the relevant facts, it is considered that the rent you receive from leasing the property would be considered assessable income under section 6-5 of the ITAA 1997. | Q2: Will a deduction for the expenses incurred in relation to the leased property be an allowable deduction under section 8-1 of the ITAA 1997? | A2: Yes. Having considered your circumstances and the relevant facts, it is considered that the expenses you incur in relation to the leased property will be allowable deductions under section 8-1 of the ITAA 1997.

Relevant facts and circumstances: The Trust owns a property (the property). The Trust intends to lease the property to two of its beneficiaries at commercial rent and on commercial terms. The parties will enter into a general tenancy agreement which includes standard lease terms and conditions. The Trust has borrowed funds from related entities to acquire the property. Interest on the borrowed funds is charged at commercial rates. It is anticipated that the expenses and outgoings relating to the property will exceed the commercial rent received. The commercial rent will be reviewed and adjusted from time to time to reflect any changes in the market rates of rent.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 8-1