Private ruling: rental properties
Published: November 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you assessable on 100% of the rental income on the rental properties after you have been granted full ownership rights by the Family Court? | A1: Yes. | Q2: Are you entitled to claim 100% of the deductions on the rental properties after you have been granted full ownership rights by the Family Court? | A2: Yes.


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

Reasons for decision: Summary: 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. Rent is regarded as ordinary assessable income. Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature. Taxation Ruling TR 93/32 discusses the income/loss from a rental property jointly owned by husband and wife. The ruling states that this income/loss must be shared according to the legal interest of the owners except in those very limited circumstances where there is sufficient evidence to establish that the equitable or beneficial interest is different from the legal title. The Family Court Order under the Family Law Act 1975 effectively confirms your 100% interest in the investment properties even though, on the date the Order was made, you and your former spouse were still the registered joint owners. Accordingly, it is accepted that your equitable interest was different from your legal interest from the date of the Order. Therefore, from the date you signed the consent orders the properties are considered to be yours. Therefore you are entitled to 100% of the income and claim 100% of the rental property expenses incurred in relation to the properties from the date of the Court Order. The fact that the actual transfers did not occur to a later date does not change this.

Relevant facts: You and your former spouse purchased rental properties as joint tenants. | In accordance with a Family Court Order: | · You were required to transfer your 50% interest in property A to your former spouse. | · Your former spouse was required to transfer their 50% interest in other properties | Due to difficulty in obtaining finance, the required transfers were not made until a few months later. | When the properties were transferred, the Office of State Revenue backdated the transfers to the date of the Family Court Order. | Application was lodged with the Land Titles Office recently to transfer the properties. The effective date of transfer was backdated to the date of the Family Court Order.