Private ruling: Rental income
Date of advice: 14 June 2022
Published: September 2022
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the money received from your ex-spouse assessable income? | A1: No. Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that assessable income includes income according to ordinary concepts, which is called ordinary income. It is accepted that in this case the weekly payments being received from your ex-spouse in accordance with the court order are not income according to ordinary concepts and therefore are not assessable. | Q2: Can your house be treated as a rental property for the purpose of claiming income tax deductions? | A2: No. Section 8-1 of the ITAA 1997 provides that in order for a loss or outgoing to be deductible, there must be a connection between the expense and the gaining or producing of assessable income. However, you cannot deduct a loss or outgoing that is of a private, capital or domestic nature. It follows that as you were not in a rental arrangement with a tenant and not in receipt of rental income you are not able to claim a deduction for expenses associated with your former home.

Relevant facts and circumstances: You purchased the property a couple of decades ago. The title of the property is solely in your name. You are the only person that has been paying the mortgage. You married a few years after purchasing the property. You divorced several years ago. In the year prior to your divorce, court orders were issued which gave your ex-spouse sole use of the house along with your children. The court orders were amended a couple of months later to allow your ex-spouse to indefinitely occupy the house. Under the court orders you were required to pay the mortgage, home insurance and rates. Your ex-spouse was required to pay for the utilities and services and transfer them into their name. They were also required to pay you a weekly amount into an account that you nominated. Your ex-spouse vacated the property a couple of years later.

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