The Government today announced that a measure to bring the write-off for capital expenditure on buildings and structures into the uniform capital allowance system will not commence on 1 July 2005.
The Government previously indicated that it accepted in principle a Review of Business Taxation recommendation that new buildings and structures should be included in the uniform capital allowance system. The income tax law currently provides a separate write-off regime for buildings and structures. However, the measure raised a number of extremely difficult practical issues, including separating land value from that of the buildings and structures, and defining the asset unit (a single building or many smaller assets).
At the time, the Government indicated that in light of the need for significant amounts of further work and competing tax priorities, the measure, if proceeded with, would not commence until at least July 2005.
Further work on the proposal indicates that the practical issues remain. Consultation with interested parties will soon commence to consider whether these issues can be resolved.
In responding to the 2004 Productivity Commission Inquiry Report on First Home Ownership, the Government stated there was a risk that any change could create uncertainty in the current market and that it would not be considering specific changes to the tax system which may disadvantage home buyers or those renting. This will be a consideration in whether or not to proceed with the recommendation.