When Renting from Your Own Trust: Tax Implications You Should Know
- pdbptax
- Aug 26
- 1 min read
Updated: Sep 14
Fred thought he was being smart. Instead of renting a factory elsewhere, his company paid rent to a unit trust, which is owned 60% by Fred and 40% by his son Kevin. But here’s the twist — the rent was nearly double what others were paying in the same suburb.
Sounds harmless? Not to the Tax Office.
From a tax perspective, this can be a red flag. The ATO may treat this as an indirect value shift under the General Value Shifting Provisions. This could mean:
Adjustments to asset cost bases, or
Reductions to realised losses or gains.
The rules are complex, but there are also exceptions — for example, if the entity qualifies as a small business entity.
👉 Key lesson: Always benchmark related-party rental arrangements to market rates. Paying too much (or too little) rent could invite unnecessary tax consequences.
