- December 2, 2023
- Posted by: legaleseblogger
- Category: Related News
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Seeking Clarification Regarding Domestic Arrangements and Rent Assistance
When it comes to sorting out domestic arrangements with rent assistance, it can be confusing to figure out the best course of action. Should you contact the Australian Taxation Office (ATO) or consult with your accountant, especially considering the link to Centrelink? Despite finding some sources, none seem to address your specific situation, adding to the complexity of the matter.
For instance, if you are a homeowner and want to charge lodgings to a friend, it can be considered a domestic relationship. However, determining the appropriate amount to charge and avoiding potential tax implications, such as capital gains tax (CGT), adds a layer of uncertainty. Using cash payments may hinder your friend’s ability to claim rent assistance, further complicating the situation.
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Additionally, you may wonder if your friend can claim rent assistance under a domestic arrangement and how to ensure compliance with the regulations. Will the ATO reach out to you if there are potential declaration requirements, or will it only become apparent in your next tax return? Given the connection to Centrelink, you may question whether your accountant possesses the necessary expertise to address these concerns and seek guidance from others with similar experiences.
Considering these uncertainties, a viable option could be to deduct the amount your friend would receive from rent assistance from the lodgings. This approach may provide a more straightforward solution while aligning with the regulations.
In conclusion, with the AI Legalese Decoder at your disposal, you can navigate the intricate legal aspects of this situation with confidence. By leveraging this resource, you can gain clarity on the applicable laws and regulations, enabling you to make well-informed decisions and streamline the process of managing domestic arrangements and rent assistance. Cheers!
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****** just grabbed a
https://www.legacy.ato.gov.au/Individuals/Investments-and-assets/Residential-rental-properties/Rental-income-you-must-declare/
Says you have to declare all rent received anyhow even if its domestic
ÔÇ£What you must declare
You must declare all the income you receive for your rental property (including from overseas properties) in your tax return. These include:
short-term rentals (for example, a holiday home)
renting your property through a sharing platform (as examples, AirBNB, HomeAway or Flipkey)
renting part or all of your home (for example, renting out a room)
formal and domestic arrangements where you rent out to family and friends at less than commercial (or market) rates.ÔÇØ
Anyhow, you can always call the ato and ask
If you charge your friend to live with you, it is rent, not ‘lodgings’. It also isn’t a ‘domestic arrangement’, it’s a tenancy. If you don’t want to pay tax on it or have any CGT issues, don’t rent out part of your house.
That’s not saying plenty of people don’t do it and not declare it, but if they are claiming rent assistance on the rent they are paying you at that address and you don’t declare it, I suspect this may have a higher chance of being picked up (although admittedly I don’t know what mechanisms the ATO have in place to catch this).
TL;DR: I believe it would be tax fraud
I am not an Accountant but I have researched this particular issue before and from memory, for it to be considered by the ATO to be a *ÔÇØdomestic relationshipÔÇØ* the boarder or lodger *must* be a *ÔÇØfamily member or relative.ÔÇØ*
I donÔÇÖt remember there being any specific guidelines as to how *close* a family member or relative they need to be, so I imagine that is fairly flexible depending upon the individual circumstances or situation.
But definitely a *ÔÇØfamily member or relativeÔÇØ* which would probably preclude *ÔÇØfriends.ÔÇØ*