• Limiting tax deductions for vacant land

Following the federal budget announcement in 2018, tax law set to deny a deduction for the costs of holding vacant land in specified circumstances has been passed without amendment by the House of Representatives, and now moves to the Senate.1

The new rules will apply to individuals, trusts (which are not widely held) and to self-managed super funds (SMSF’s). They will not apply to companies, managed investment trusts, public unit trusts or super funds other than SMSF’s.

Current income tax law allows those who hold vacant land to claim a tax deduction for the costs of holding the land if it is held for income-producing purposes, or if they are carrying on a business to produce income.

Broadly, under the new law, a deduction for the costs of holding vacant land will be limited to land (or significant structures on the land) that are utilised in a business or available for rent.