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Enhancing the integrity of tax deductions in relation to vacant land

Published on 02 Nov 18 by THE TAX INSTITUTE

From 1 July 2019, the proposed legislation will limit deductions for expenses associated with holding vacant land. The measure does not apply to expenses associated with holding vacant land that is used by the owner or a related entity to carry on a business. 

Members are concerned that the Government has significantly underestimated the scale and scope of arrangements that are going to be affected under the proposed legislation. Further, in our opinion, the proposed legislation creates significant uncertainties. As the law is currently drafted, if land is not genuinely held for the purpose of generating assessable income, the costs are not deductible. In our opinion, the integrity issues should be addressed through better enforcement rather than making the tax system more complex by introducing further legislation.

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The Tax Institute is Australia's leading professional association and educator in tax, with offices in most major cities. Focusing solely on tax, the Institute provides the best resources, education and networks. Our mission is to equip tax professionals with everything they need to demonstrate the highest level of expertise and increase the advancement of public knowledge and understanding. We are also committed to propelling members into the future and onto the global stage with the introduction of the Chartered Tax Adviser designation.
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