Private ruling: Rental income
Date of advice: 8 November 2023
Published: 18 December 2023
Ruling period: Year ended 30 June 2022 | Year ended 30 June 2023
Date scheme commenced: 1 July 2021

Ruling: Q1: Is the rental income required to be attributed to each co-owner according to their legal interest? | A1: Yes. Based on the information provided to the Commissioner each legal owner of the property must declare their share of the income in their own tax return in accordance with their legal ownership interest. As you own a percentage of the property you are required to declare that percentage of the rental income in your tax return despite the will of your late spouse bequeathing 100% of the rental income to you. The will does not grant you a life interest in the property and therefore there is no equitable interest in the property and the bequeathing of the rental income is a private arrangement between beneficiaries.

Relevant facts and circumstances: You and your late spouse each owned a percentage of the property. When your late spouse passed away, they bequeathed their share of the property to their children. Your late spouse's share of the rental income is to be paid to you under their will until you pass. The will states that it is not intended to create a life interest in any of the property.

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