Private ruling: Assessability of rental income
Published: August 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are additional rental payments received from a relative considered assessable income? Advice/Answers Yes.

Relevant facts and circumstances: You own a property which you occupied as your primary residence. Due to work commitments you moved into a rental property closer to your work, and rented your primary residence through a real estate agent at a commercial rate. After a period of time you evicted the tenants and rented the house to a relative at the same commercial rate. You advised that you moved into a larger rental property, and to assist you in affording the higher rent payable, your relative paid you extra rent within the same transaction as the regular rent paid to you.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5.

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) specifies that residents of Australia are assessable on income derived from all sources in and out of Australia. Whilst we acknowledge that you advised that the purpose of the extra rent payment was to assist you in affording to live in your new home, there is no objective evidence available which allows the Commissioner to conclude that the entire payment amount received may be characterised as anything other than rent. Therefore the entire payment received as rent is assessable under section 6-5 of the ITAA 1997.