The Government is improving the integrity of the tax system by denying certain deductions for expenses associated with holding vacant land.
Draft legislation released today for public consultation limits deductions for expenses associated with holding vacant land from 1 July 2019. This measure was announced in the 2018-19 Budget, and addresses concerns that deductions are being improperly claimed for holding vacant land where the land is not genuinely held for the purpose of earning assessable income.
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. For example, the measure will not apply to a business of primary production or to a property developer that is carrying on a business and is holding land for the purpose of that business.
The measure also does not apply to corporate tax entities, managed investment trusts, public unit trusts and unit trusts.
The Exposure Draft Bill and Explanatory Memorandum are available on the Treasury website.
Submissions will close on Wednesday, 31 October 2018.