Private ruling: Income from overseas investment property
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 entitled to include in your Australian tax return losses attributed to an overseas rental property? | A1: 


Relevant legislative provisions: Income tax assessment Act 1997 section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for a loss or outgoing to the extent that it is incurred in gaining or producing assessable income but not for a loss or outgoing to the extent that it is of a capital, private or domestic nature. Taxation Ruling TR 93/32 discusses the issue of ownership relating to rental properties. The inclusion of expenses and losses in an individuals tax return is only available to the legal owner of the property, except in those limited circumstances where there is sufficient evidence to establish that the equitable (or beneficial) interest is different from the legal title. A person's legal interest in a property is determined by the legal title to that property under the land law legislation in the State or Territory in which the property is situated. The legal owner of the property is recorded on the title deeds for the property issued under that legislation. In your situation you are not the legal owner of the rental property. The company in which you are the sole shareholder is the legal owner as they appear on the title deed. Deductions and losses associated with the rental property can only be included in the company's tax return as the company owns the rental property. Consequently you are not entitled to include expenses and losses associated with the rental property in your Australian tax return.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: You live and work permanently in Australia. | You are a citizen of an overseas country. | You have a rental property in that overseas country. | The rental property is owned by an overseas company. | You are the sole shareholder of that company.