Private ruling: Am I in business - property investment
Date of advice: 31 March 2023
Published: 29 May 2023
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the self-managed superannuation fund (the SMSF) carrying on a business of letting rental properties? | A1: Yes. The size and scale of your activity is significant. There is repetition and regularity of activities and a purpose of making a profit. The activity is carried out in a systematic and business-like manner with the keeping of books and records and is carried on in a manner characteristic of the industry.

Relevant facts and circumstances: A company is the corporate trustee of the SMSF. Person A is the sole director and secretary of the corporate trustee and is the sole beneficiary of the SMSF. The SMSF owns multiple rental properties, all rented to long-term tenants. The SMSF manages all the properties. Person A advertises for new tenants through the Yellow Pages and on Facebook, completes the selection process for tenants, including residential tenancy agreements and associated documentation. Person A has extensive personal involvement in the activities and attends to all aspects of each property's management. They spend a significant number of hours on tasks and activities each week. Records showing income, expenses and profitability of each property are kept. The SMSF keeps records showing income, expenses and profitability of each park site owned. Person A carries out yearly inspections of all properties to determine maintenance required. Rent collection is completed twice a month. Person A receives a significant number of phone calls per week for the rental properties. All tenants have Person A's phone number. Person A has many years of knowledge and skills in maintaining, renovating and renting out property.

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