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  • Limiting deductions for vacant land

    In the 2018–19 Federal Budget the Government announced that it would limit deductions for expenses associated with holding vacant land. Provisions to give effect to these changes are contained in Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Act 2019 which received royal assent on 28 October 2019.

    The changes apply to limit the deductions that can be claimed for holding vacant land incurred on or after 1 July 2019, even if the land began to be held before that date.

    For the purposes of determining whether deductions for holding cost are denied, land is considered vacant if:

    • at the time the expense was incurred, the land did not contain a substantial and permanent structure; or
    • the land did contain a substantial and permanent structure that is residential premises, the premises is not lawfully able to be occupied, or it is not rented out or made available for rent.

    Deductions for vacant land holding costs are not impacted by these changes if:

    • the land is held by:  
      • corporate tax entities, superannuation plans (other than self-managed superannuation funds), managed investment trusts or public unit trusts; or
      • unit trusts or partnerships of which all the members are entities listed above
    • the land is used in carrying on a business by:  
      • you
      • your affiliates
      • an affiliate of you
      • your spouse or child (under 18) or
      • an entity connected with you
    • you or an entity listed above is carrying on a business of primary production and the land is leased or hired to another entity
    • the land is made available at arm's length to a business for use in the business
    • a substantial and permanent structure was on the land but an exceptional circumstance occurred that resulted in the land becoming vacant.

    Legislation and supporting material

    Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019 External Link

    See also:

    More information

    Deductions for vacant land | Australian Taxation Office

      Last modified: 07 Jan 2020QC 60510