Private ruling: Income
Published: May 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you assessable on the payments you receive from renting a room of your property? Answer No

Relevant facts and circumstances: You receive $xx per week from a friend who has unrestricted use of a bedroom, main bathroom and second toilet in a home and also has a car space in the garage. The friend has access to all general living areas. They share another bedroom for clothing storage. The costs of electricity, gas, water use, home telephone and internet are shared equally. The cost of a cleaner, household cleaning products, common food items e.g. sugar, new kitchen equipment/utensils etc is shared. These costs are additional to $xx per week. Living costs such as food are kept separate. Council and water rates, insurance, repairs and property maintenance are not shared. There is no mortgage loan over the property. There is no written tenancy agreement, no bond and there is an understanding that the friend could leave at any time, without financial repercussions. The bedroom has never been advertised for rent.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Taxation Ruling IT 2167 provides guidelines in determining the authenticity or otherwise of rental arrangements, the assessability of receipts derived from various rental arrangements and the deductibility of expenses incurred in connection with a property where the arrangement is not one that is affected at arm's length. In your situation, the payments you receive from your flatmate are not considered to be rental income since it is a non-arm's length transaction and is not at a commercial rate of rent. Therefore, the payments received from your flatmate are not assessable income. In addition, as the arrangement is private in nature, no deductions are allowable in respect of losses or outgoings incurred in connection with the property.