Property and Construction Stakeholder Relationship Forum key messages 13 April 2022

Opening address

Louise Clarke, Deputy Commissioner Private Wealth, opened the meeting acknowledging the contribution members make to this and other ATO forums, particularly the newly established Build to Rent working group.

Economic forecast – Master Builders Australia

Detached housing

Home Builder propelled detached houses to immense heights.

The 2021 financial year was the strongest year on record since the 1970s.

Recently deceleration is being seen post-Home Builder stimulus.

High-Medium density housing

Forecast to grow, driven in part by deteriorating housing affordability and demand from increasing overseas migration.

Home renovations

Renovations have increased substantially, and approval figures are significantly elevated. Home renovations are expected to remain high for the foreseeable future.

Non-residential

Demand for industrial property surged during Covid-19 due to a strategic shift on the part of companies and government. The shift is away from reliance on international supply chains towards domestic manufacturing and storage options for example, warehousing.

Is it expected to fall back from its Covid-19 peak, however retaining permanent and long-lasting growth.

GST withholding credits processing delays

Several clients have had delays in receiving their GST property credits after their BAS has been lodged. The ATO is actively addressing this with several treatments, including:

• Getting the Forms Right – 98% of delays are due to clients and/or representatives making errors on the forms for GST on settlement. The ATO actively engages conveyancers monthly providing them with updates on common errors and how to avoid them.
• Streamlining Processes – Enhanced workflows, prioritisation and using ATO models to pick up required information where possible. The ATO is continuing to work with industry to make sure we get this right.
• Promotion of clients to take ATO calls – ATO staff are making outbound calls to address this issue, with more than 60% of form errors requiring us to talk to the client. However 80% of calls from the ATO to clients are not answered. To improve this, we are looking to do a pre-call SMS, providing clients with an allocated time.

Corporate liabilities determination project

The purpose of the Corporate liabilities determination project is to raise awareness about Director penalty notices (DPN) and that Directors maybe personally liable for certain debts, Super, pay as you go withholding, GST.

Further information on Director penalty notices warning letters to directors and notice of intent to disclose a tax debt to credit reporting agencies is available.

Australian Securities and Investments Commission insolvency update

Insolvencies have increased in 2021–22 on last financial year.

Comparing 2021–22 financial year to the base year (an average of the 3 financial years 2017, 208 and 2019, pre covid), we see that insolvencies are down 42%.

There has been an increase in insolvencies over the last few months, but still down on last year. Expected this is an upwards trend towards normal.

More information about ASIC insolvency statisticsExternal Link is available.

Build to Rent working group

The ATO has formed a build to rent working consultation group with the main aim to get a common understanding across the ATO, states and territories and industry to reduce the administrative burden and cost of compliance for build to rent projects.

Valuations for margin scheme

The Administrative Appeals Tribunal (AAT) decision regarding valuation professional standards was handed down, the Decleah decision. The ATO is reviewing the impact of this decision, once approved internally this will go to public consultation.

Vacant land deductions

Discussion regarding vacant land deductions in scenarios where there are large plots of agricultural land with small portions dedicated to residential property.

Draft Taxation Ruling TR 2021/D5 Income tax: expenses associated with holding vacant land which has been put out for consultation, with commentary, sets out preliminary view.

Capital verses revenue guidance

The ATO have commenced production on web guidance which is expected to be available this year. It will provide guidance on capital verses revenue and encourage clients to get in touch with the ATO for assistance.

Other business

Update on ATT decision in Ian Mark Collins & Mieneke Mianno Collins ATF The Collins Retirement Fund and Commissioner of Taxation (Taxation) [2022] AATA 628: The Decision Impact Statement is being prepared by the ATO and will be circulated once finalised.

The ATO is returning to pre-covid approaches with Extension Requests with each request being considered on a case-by-case basis.

Income tax treatment of the windfall gains tax (WGT) in Victoria: The ATO recommends taxpayers approaching us for individual advice on their circumstances.

Temporary Full Expensing for commercial landlords: This will be taken offline and followed up with the group in a future session.