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Re: Can a trust carry out a rental property business without an ABN ?

Devotee

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Replies 2

Hi if time permits please assist with the below query. 

 

Per what I know, an entity needs to have an ABN if to engage in a business.

 

 Assume that there is a discretionary investment trust with a corporate trustee and neither have ABNs.

 

 The Source of income is from two residential properties.

 

 All beneficiaries are individuals.

 

The trust incurred motor vehicle expenses in inspecting the properties.

 

Per ATO the expenses are deductible if the entity is either

 

The trust in question is not an excluded entity, so the question is it whether it is carrying out a  business.

 

My questions are as below.

 

Q1 Are the travel expenses deductible?

 

Q2 If deductible is it because it is in the business of renting properties

 

Q3 Is it possible for the trust/corporate trustee to be in a business without having an ABN.?

 

I have already contacted the ATO ( tax professional phone line) on this and their response was 'Yes' for all three questions.

 

Thank you

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Devotee Registered Tax Practitioner

Replies 1

The trust in question is not an excluded entity, so the question is it whether it is carrying out a  business.

 

From the cases, I cannot see that 2 residential properties make a business.

The ATO will resist on this   -  e.g. you need to lodge a private ruling request.

https://www.ato.gov.au/General/ATO-advice-and-guidance/In-detail/Private-rulings/Supporting-document...

 

Q1 Are the travel expenses deductible?

Q2 If deductible is it because it is in the business of renting properties

Yes, if it is really a business  -  but I cannot see it.

 

Q3 Is it possible for the trust/corporate trustee to be in a business without having an ABN.?

Yes, but if getting income from another business then the payer has to deduct 45% tax for no ABN.

We have a payer who paid a contractor on the basis that he would get an ABN  -  contractor did not do it, and it cost my guy $ 7000 for fail to deduct.

 

I have already contacted the ATO ( tax professional phone line) on this and their response was 'Yes' for all three questions.

 

IF it was a business  and you can get a private ruling to that effect.

 

 

2 REPLIES 2

Most helpful response

Devotee Registered Tax Practitioner

Replies 1

The trust in question is not an excluded entity, so the question is it whether it is carrying out a  business.

 

From the cases, I cannot see that 2 residential properties make a business.

The ATO will resist on this   -  e.g. you need to lodge a private ruling request.

https://www.ato.gov.au/General/ATO-advice-and-guidance/In-detail/Private-rulings/Supporting-document...

 

Q1 Are the travel expenses deductible?

Q2 If deductible is it because it is in the business of renting properties

Yes, if it is really a business  -  but I cannot see it.

 

Q3 Is it possible for the trust/corporate trustee to be in a business without having an ABN.?

Yes, but if getting income from another business then the payer has to deduct 45% tax for no ABN.

We have a payer who paid a contractor on the basis that he would get an ABN  -  contractor did not do it, and it cost my guy $ 7000 for fail to deduct.

 

I have already contacted the ATO ( tax professional phone line) on this and their response was 'Yes' for all three questions.

 

IF it was a business  and you can get a private ruling to that effect.

 

 

Devotee

Replies 0

Hi @Bruce4Tax Thanks for the clarifications