'Primary Producer' Exception: Under S.26-102(8), if certain conditions are met, the restriction on claiming deductions for holding vacant land can be lifted. These conditions include:
- The land is leased, hired, or licensed to another entity.
- The taxpayer or a related entity is running a primary production business.
- The land doesn't have residential premises or construction underway for such premises. This exception ensures that holding costs for land leased out for income-producing activities related to primary production aren't denied as deductions.
Example: If surplus farmland is leased to another party for their primary production business, deductions can still be claimed under this exception.
'Exceptional Circumstances' Exception: This exception applies when structures on the property are affected by natural disasters or other exceptional circumstances, rendering them unusable or uninhabitable. Delays in construction are generally not considered exceptional circumstances. The exemption still applies if the land remains vacant due to exceptional circumstances, even if the event occurred before July 2019.
Example: If a rental property is damaged by a major fire, the owner can continue claiming deductions for holding the land, even if there's no usable structure, for up to three years from the fire. Extensions beyond three years can be requested from the ATO.
Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.
- The New 'Vacant Land' Rule (1)
- The New ‘Vacant Land’ Rule (2) – ‘Substantial and Permanent Structure’
- The New ‘Vacant Land’ Rule (3) – ‘In Use or Available for Use’
- The ‘Vacant Land’ Exclusions (1) – The ‘Carrying on A Business’ Exception (1)
- The ‘Vacant Land’ Exclusions (2) – The ‘Carrying on (any) Business’ Exception (2)
