Tax question – superannuation claimed by property investor

It’s a common misconception amongst accountants that property investing can not be considered a business activity. It can. It’s just that it’s unusual in the current climate, for an investor to meet the criteria.

I’d claim it, but expect the ATO to question the deduction, when they do… write to them (an accountants letterhead wouldn’t hurt) and describe your activity in the context of the following 8 questions:
does the activity have a significant commercial purpose or character?
* does the taxpayer have more than a mere intention to engage in business?
* is there an intention to make a profit or a genuine belief that a profit will be made? Will the activity be profitable?
* is there repetition and regularity in the activity? i.e., how often is the activity engaged in? How much time does the taxpayer spend on the activity?
* is the activity of the same kind and carried on in a similar way to that of the ordinary trade?
* is the activity organised in a businesslike manner?
* what is the size or scale of the activity?
* is the activity better described as a hobby, a form of recreation or a sporting activity?

Unfortunately this is the sort of question for which there is no black and white answer, if you ring the ATO they’ll just say ‘no’. But in a self-compliance tax system, it’s up to you to understand the legislation, interpret it, and apply it to your own situation. So in these situations you simply lodge your tax return, and be prepared to explain your application of australian tax law.

Some interesting reading:
law.ato.gov.au/atolaw/view.htm?docid=SAV/00237831/00002
law.ato.gov.au/atolaw/view.htm?locid=’TXR/TR9711/NAT/ATO’&PiT=99991231235958#P23
law.ato.gov.au/atolaw/view.htm?locid=’ITR/IT2423/NAT/ATO’&PiT=99991231235958