Limiting deductions for vacant land
Source: Taxation In Australia Journal Article
Published Date: 1 May 2020
Amending legislation to limit deductions for vacant land operates by adding a qualifier to every provision in the tax Acts that provides for a deduction. Also, there are wider implications than merely losing some deductions, and consequences arise from the interaction with the capital gains tax regime. Although some welcome exceptions were introduced during the legislative process, traps remain for the unwary, including new tax risks for smaller-scale property developments. This includes circumstances where land with completed houses or units, incredibly, will be regarded as vacant. With no grandfathering, options may be limited for existing holdings of land, and some established structuring norms must now be re-evaluated. This article sets out what constitutes vacant land, how the new law operates to deny deductions, the available exceptions, and the broader consequences. A number of practical examples illustrate the outcomes, which then shine a light on weighing up alternative structuring options for future acquisitions of land.
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Details
- Published By: David Montani
- Published On:1 May 2020
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