Are you holding vacant land?

Are you holding vacant land?

If you are holding vacant land, the law changed from 1 July 2019 so that any expenses you have relating to the land are generally not deductible. This is the effect of legislation (the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019) that became law on 28 October.

What are the exceptions?

There are certain exceptions. You can still claim a deduction to the extent the land is used, or held available for use, in a business including where the business is carried on by your spouse or child or by an affiliate or a connected entity. A deduction is also available where the land is held by a company or a partnership of companies.

The legislation was amended during its passage through the Parliament to add additional exceptions. These apply to vacant land:

  • held by primary producers;
  • used for business purposes under arm’s length arrangements; or
  • on which there is situated a substantial and permanent structure, and the land effectively becomes vacant because of an event outside your reasonable control, such as a natural disaster, fire or substantial building defects (for up to 3 years).

So, you can still claim a deduction in those circumstances.

To do! Contact your tax adviser if you hold vacant land. ■

Ref: TaxWise Business November 2019

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