Private ruling: Rental income
Published: December 2011
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you required to declare rent received from a friend as assessable income? | A1: No.


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

Reasons for decision: Summary: Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts. Taxation Ruling IT 2167 examines the situation where a property is let to relatives in a non-arms length transaction. Where the rent payment received amounts to a contribution to expenses, and is not considered as a reward to the home owner but is instead a private arrangement, the rent is not considered 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, or relate to the earning of exempt income. In your case, you are renting your property in a non-arms length transaction. Therefore, the money you receive from your friend is not assessable. Likewise, as the expenses are not incurred in gaining or producing assessable income you are not eligible to claim any related deductions.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: A friend came to live with you in your private home. | You charge them an amount and they also pay for 50% towards electricity costs and have their own phone. | Your friend has two rooms and their own bathroom and toilet and garage. | You pay for the rates, water, insurance, repairs and maintenance.