On October 28, 2019, a new law called the Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Act 2019 was passed. It introduced rules to limit tax deductions for "vacant land," which means land without any permanent buildings on it. These rules affect property owners, especially those building or renovating rental or business properties.
Before, people could deduct expenses like interest, rates, insurance, and maintenance costs for vacant land if they planned to use it for making money. But now, the new law, Section 26-102 of the Income Tax Assessment Act 1997, says you can't deduct these expenses if the land doesn't have a permanent building on it when you pay them. This applies to costs from July 1, 2019, even if you owned the land before that.
This rule isn't just for landowners. It also affects tenants who lease land. For example, if you're leasing land and paying these expenses, you can't deduct them either if the land is vacant.
However, there are exceptions to this rule. One exception is if the vacant land is being used for a business. This exception applies whether you own the land or if it's used by a related business. There's also an exception for land leased for business use, even if it's not your business using it.
Some changes were made to the law to help certain groups affected by these rules, like farmers or others facing unexpected problems with their land. These changes were explained in a document called the Supplementary Explanatory Memorandum.
