Private ruling: Assessable income - residential rental property
Date of advice: 2 November 2023
Published: 11 December 2023
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you conducting a business of leasing rental properties for the purposes of 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. After considering the factors outlined in TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11) your activities are not consistent with someone expected to be carrying on a business of leasing residential properties.

Relevant facts and circumstances: You currently own a residential rental property which is leased to an unrelated third party. You will be purchasing an additional rental property within the next 18 months. You do the following activities in relation to your rental property spending around 14 hours per year on: • Agent correspondence • On-site inspection • Administration and accounts management. The activities that you do in regard to your current rental property will be the same for your future rental property. You engage the services of Company A to manage your current rental property. You will engage a real estate agency to manage your new rental property similar to the current rental agreement you have in place. You provided us with the leasing and managing authority between you and Company A. The authority specifies that Company A has authority for: • Letting/leasing of the property • Subsequent re-leasing to the initial tenant • Each new leasing to a new tenant • Managing the property • Collection of rent. The tenant of the property is select by a consultation between yourself and Company A.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 995-1(1)