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MandyZhao(Newbie)Newbie
15 Feb 2022

Hi,


Could someone please shed some light on the definition of "business" in the context of "similar business test"? Say if a company is renting out a rental property before and after the change of ownership, does it satisfy the "similar business test" considering the income is generated from the same underlying asset?


Or the company cannot rely on the similar business test as it does not carry on business at the first place?


Thanks in advance for any input.

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552 views
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Most helpful reply

CaroATO(Community Support)Community Support
17 Feb 2022

Hi @MandyZhao,

 

The example you provided shows both businesses will use the asset, the rental property, to earn assessible income.

 

If one of the companies is not in business, it can't use the smilar business test. Things like intending to make a profit, treating the activity like a business where they keep accounting books/software and have a seperate business account, are some of the things that show you're running a business.

 

We've some fantastic information on our website that talks about carrying on a similar business and are you in business.

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Most helpful reply

CaroATO(Community Support)Community Support
17 Feb 2022

Hi @MandyZhao,

 

The example you provided shows both businesses will use the asset, the rental property, to earn assessible income.

 

If one of the companies is not in business, it can't use the smilar business test. Things like intending to make a profit, treating the activity like a business where they keep accounting books/software and have a seperate business account, are some of the things that show you're running a business.

 

We've some fantastic information on our website that talks about carrying on a similar business and are you in business.

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What is the definition of "business" in similiar business test | ATO Community