Travel relating to residential rental properties

The new draft Ruling concerns the amendments commencing from 1 July 2017 which deny deductions for travel expenditure incurred in gaining or producing assessable income from using residential premises to provide residential rental accommodation. Prior to the amendments, travel expenditure was generally deductible under section 8-1 to the extent that it was incurred in gaining or producing assessable income from a rental property.

The ruling confirms that certain taxpayers are not subject to the amendments (such as companies) and that the restrictions do not apply if the expenditure was necessarily incurred in carrying on a business.

The draft ruling considers whether someone might be carrying on a business of property investing and indicates that this is a question of fact. The ATO notes that it would generally be more difficult for an individual to demonstrate that they are carrying on a rental business compared with a company as the rent will typically be treated as passive investment income rather than income from a business.

To find out more about the whether your investment income considered as passive or income from a business, come and talk to us Tax Ideas Accountants & Advisers   Tel: (02) 8318 1545

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