Private ruling: Net rental profit-loss
Date of advice: 21 September 2022
Published: December 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to declare 100% of the net rental profit/loss for each of the rental properties for the 20XX-XX income year? | A1: Yes. Generally, a net rental profit/loss must be declared according to the legal interests of the rental property owners. However, an exception is where there is sufficient evidence to show that the equitable interests in the rental property are different to the legal interests. In your case, the binding financial agreement under section 90D of the Family Law Act 1975 altered the equitable interests in the rental properties in question from the legal interests. Having regard to the change in equitable interests it is accepted that you are entitled to declare all of the net rental profit/loss for each of the rental properties in question with respect to the 20XX-XX income year.

Relevant facts and circumstances: You and your ex-spouse separated when your ex-spouse left Australia permanently. You later divorced. You and your ex-spouse entered into a binding financial agreement under sections 90D and 90G of the Family Law Act 1975 . At the time of your separation, you and your ex-spouse jointly owned several properties. The binding financial agreement stipulated that from XX/XXXX (a date during the 20XX-XX income year), you were solely responsible for the income and outgoings with respect to these properties. You have been solely paying all the outgoings for the properties since that date. The binding financial agreement also provided that full legal title for the properties would later be transferred to you. The properties were rented out during the 20XX-XX income year.

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