A scenario seems to have arisen and I require some feedback to determine the right procedure in regards to the declaration of income on an IP of a family member:
Scenario = A house in Sydney is being rented for say $500 per week.
Person A = Owns the property, bought in her name and took out mortgage in her name.
Person B = Lease signed with tennant is in her name.
Person C = Receives the rent into his bank account.
Now person A, B and C are all siblings (I Know mixing family with business doesn't always seem to work but this is the way we're flowing at the moment!) and they are all partners in the purchase of the property which was put in person A's name.
Now this is a bit tricky/messy and we are trying to structure the IP to get the tax breaks but we are unsure how much info the ATO have on an IP such as this?
ie. do they check the LPI title index and therefore know that person A owns the property and should therefore be declaring the income?
Or does ATO liaise with the rental Bond Board and therefore be aware person B has signed a lease and should therefore be declaring $500 income?
Or does ATO receive info on bank accounts and can therefore determine person C is receiving $500 per week in income and should be declaring it?
If the above scenarios planned out then the siblings would have to declare $1,500 income whilst only receiving $500 rent haha!! (that would not be a good tax strategy ...)
A big mistake seems to have arisen in the paperwork signing lease, paying money into a/c etc because ideally it should all be dealt with by the 1 person. From my knowledge person A should declare the income because she owns the land in her name!
Any feedback would be much appreciated.
Thanks guys,
Ritchie
Scenario = A house in Sydney is being rented for say $500 per week.
Person A = Owns the property, bought in her name and took out mortgage in her name.
Person B = Lease signed with tennant is in her name.
Person C = Receives the rent into his bank account.
Now person A, B and C are all siblings (I Know mixing family with business doesn't always seem to work but this is the way we're flowing at the moment!) and they are all partners in the purchase of the property which was put in person A's name.
Now this is a bit tricky/messy and we are trying to structure the IP to get the tax breaks but we are unsure how much info the ATO have on an IP such as this?
ie. do they check the LPI title index and therefore know that person A owns the property and should therefore be declaring the income?
Or does ATO liaise with the rental Bond Board and therefore be aware person B has signed a lease and should therefore be declaring $500 income?
Or does ATO receive info on bank accounts and can therefore determine person C is receiving $500 per week in income and should be declaring it?
If the above scenarios planned out then the siblings would have to declare $1,500 income whilst only receiving $500 rent haha!! (that would not be a good tax strategy ...)
A big mistake seems to have arisen in the paperwork signing lease, paying money into a/c etc because ideally it should all be dealt with by the 1 person. From my knowledge person A should declare the income because she owns the land in her name!
Any feedback would be much appreciated.
Thanks guys,
Ritchie