Private ruling: Income Tax - assessable income
Date of advice: 30 July 2019
Published: October 2019
Ruling period: Year ended 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022 | Year ending 30 June 2023
Date scheme commenced: 1 February 2019

Ruling: Q1: Is the Entity X required to declare any income derived from the Property in their tax return? | A1: No. Having considered your circumstances and the relevant factors, the Commissioner views you are not the beneficial owner of the property, and therefore are not required to declare the rental returns on the property.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Entity A and the Entity B purchased a property as tenants in common. Entity A made no financial contribution to the purchase of the property. Entity B's place of residence was the property. Entity B was advised by their accountant to register the property in joint names due to their role in the ABC industry as a way to establish anonymity for fear of militant union activity. The property was sub-divided into two separate titles and a second residence was constructed forming two units. Entity A did not make a financial contribution to the subdivision or construction activities. Entity A received no rent from Entity B and the property was never offered for rent prior to subdivision, and all outgoings for the property were paid by the director. Unit 1 was sold to an independent third party. Entity A did not receive any monetary or otherwise from the sale of the unit 1. Unit 2 remained in Entity B's and Entity A's names as tenants in common. Entity B lived in the property as their principal place of residence until rented, and the Entity B did not pay rent and paid all the outgoings for unit 2. Entity B's partner purchased their half share of the property and Entity B's name was removed from the title for anonymity reasons. Entity B's partner and Entity A are listed as tenants in common on the title. Entity B and their partner lived in the property as their main residence until rented. They did not pay rent and paid all the outgoings for Unit 2 during this period. The property is rented to a third party and generating assessable income.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 106-50