About rental income
If your partnership is carrying on a business and receiving rental income from that business, you are required to complete this item.
To determine whether you are carrying on a business, see Taxation ruling TR 97/11 Income tax: am I carrying on a business of primary production?
Show your share of the rental income or deductions at item 21 Rent in your Supplementary tax return for individuals 2024, if the only income you derived jointly (or in common) with another person was:
- rent from a jointly owned property
- interest from a jointly held account
- dividends from jointly held shares.
Income tests require each partner to report their share of the partnership's rental property income or loss. If the rental income is merely investment income and not partnership business income, this should be reported in your individual income tax return at item 21 for rental income or losses.
If your rental income is partnership business income, you are required to complete item 9, and show:
- your net rental property income or loss at item 53 – label H
- your share of net rental property income or loss at item 54 – label K.
For more information, see item 53 Income tests.
Former STS taxpayers still using the STS accounting method
If the partnership is eligible and has chosen to continue using the STS accounting method, base the gross rent at label F, interest deductions at label G, and general deductions and repairs included at label H on the STS accounting method.
For more information, see Continued use of the STS accounting method.
Small business entities
Depreciating assets used in rental properties are generally excluded from the small business entity depreciation rules on the basis the assets are part of property that is subject to a depreciating asset lease.
For more information, see Assets and exclusions.
Gross rent
Show at label F the gross amount of rental income. This item can't be a loss.
Rental income includes booking or letting fees, bond monies if the partnership becomes entitled to retain them, any insurance payouts that compensate for lost or forgone rent, and reimbursements from tenants of deductible expenses incurred.
If the partnership is registered for GST, and GST is payable for rental income, exclude the GST from gross rent at label F.
Show rent from foreign sources at item 23 Other assessable foreign source income.
Lease premium received from a CGT event
A capital gain or a capital loss made from the receipt of a lease premium is shown on each partner’s own tax return.
For more information on CGT events involving leases, see Guide to capital gains tax 2024.
Interest deductions
Interest is generally deductible when paid for borrowed monies used to finance a property investment.
However, the thin capitalisation rules may apply to reduce interest deductions. These rules place a limit on the amount of interest and other borrowing costs that can be deducted for Australian tax purposes; for more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise be included at label G.
If the TOFA rules apply to the partnership, include all interest expenses incurred on monies borrowed to finance a property from financial arrangements subject to the TOFA rules at label G.
Show at label G the total deductible amount of interest expense incurred in earning the rental income.
Capital works deductions
Show at label X the total capital works deductions amount for rental buildings and structural improvements, such as fences, retaining walls and sealed driveways. For information on capital works deductions, see Appendix 5. You can also work out your capital works deductions by using the Depreciation and capital allowances tool.
Other rental deductions
Show at label H the total of other deductible expenses incurred in earning rental income.
If the partnership is registered for GST, and GST is payable for rental income, exclude any input tax credit entitlements that arise for expenses from the amount shown at label H.
Expenses listed here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise be shown at label H.
Deductions for the decline in value of depreciating assets used to earn rental income are generally shown at label H. However, if the partnership has allocated some of these assets to a low-value pool, you may need to show deductions at item 18 Other deductions.
For more information, see Appendix 6.
Net rent
Show at this item the net amount of any rent.
Calculate net rent by subtracting the deductions at labels G, X and H from label F Gross rent. If this amount is a loss, print L in the box at the right of the amount.
For more information, see Rental properties guide 2024.
Continue to: Income excluding foreign income – items 10 to 15
Return to: Instructions to complete the Partnership tax return 2024