Shed rental payments

Question from A updated on 11th September 2019:

Our company is renting a large percentage of our private shed on our property. Our business is mobile so has no other premises. How do I account for these rental payments that go from the business to our personal account?

Obviously, deductible for income tax and income tax paid on rental income in personal returns. I guess no GST can be claimed on the rental payments since it is privately owned premises. The company is GST registered but individuals are not.


Our expert Mark Withers responded:

The rent payments by the company will be deductible to the company to the extent that the shed is used in the companies business. No GST can be claimed by the company because the individuals supplying the shed are not GST registered and are not charging GST on the rent.

The individuals in turn must return the rental receipts as income but will be allowed to claim deductions for interest and holding costs relative to an apportionment of the size of the shed relative to the size of the dwellings on the property - ie costs can be claimed to the extent that they derive the rental and are not private or domestic.

No GST is payable by the individuals on the rental receipts if they are unregistered. They would only be required to register if the commercial rental income exceeded $60000.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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