Private ruling: Assessable income
Published: March 2012
Ruling period: Year ended 30 June 2010 | Year ended 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Are the payments you receive from your relative assessable income? | A1: No.

Relevant facts and circumstances: You own a property that you live in. Your relative also lives with you in the house. Your relative occupies the master bedroom, with en-suite, and also has use of the lounge room and other shared facilities. You provide your relative with all meals and you also undertake all of the cleaning and maintenance of the property. Your relative pays you an amount per week to cover food, utilities, repairs and other household running costs.

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

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes all ordinary income derived directly or indirectly from all sources. Rental income is normally regarded as ordinary income and therefore forms part of the taxpayer's assessable income. However, where there is a non-commercial or domestic arrangement, amounts paid for board or lodging do not give rise to the derivation of assessable income ( FC of T v. Groser 82 ATC 4478; 13 ATR 445). Taxation Ruling IT 2167 considers the consequences of different rental income producing situations. Paragraph 17 of IT 2167 deals with payments by family members of an amount for 'board and lodging'. It states that: Arrangements of this nature, whether the payment is said to be for board only or for lodging only or for both, are considered to be in the nature of domestic arrangements not giving rise to the derivation of assessable income by the recipient of the payments. It follows that the question of income tax deductions for losses and outgoings does not arise. In your case you receive a weekly payment from your relative who lives with you. The payments you receive go towards paying the running costs of the household and food expenses. The amounts received by you are in relation to a non-commercial or domestic arrangement and are therefore not assessable income under section 6-5 of the ITAA 1997.

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