Private ruling: Assessable income
Published: December 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Is the distribution you receive considered assessable income? | A1: No.

Relevant facts and circumstances: You and your siblings own a residential property in which you reside in. You pay weekly rent. Throughout the year each of you receive a distribution from the account, after expenses have been accounted for, based on your relative ownership percentages.

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 provides that the assessable income of an Australian resident includes all ordinary income derived directly or indirectly from all sources. The mutuality principle however recognises that a person's income consists only of moneys derived from external sources. Where a number of persons contribute to a common fund created and controlled by them for a common purpose, any surplus arising from the use of that fund for the common purpose is not income. We accept that the distribution you receive is not assessable income due to the principles of mutuality. The distribution you receive is simply a portion of the surplus funds from the account after the expenses have been accounted for.