Understanding the New Rules for 'Vacant Land' Holding Costs
The new rules regarding holding costs only apply to expenses related to 'vacant land.' According to S.26-102(1)(b), land is considered 'vacant' if there's no substantial and permanent structure in use or available for use, independent of any other structure's purpose.
Here's what the explanatory material (EM) offers on defining 'vacant land':
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Substantial and Permanent Structure: A building or structure must be significant in size, value, or importance in the context of the property. A structure isn't substantial if it only adds value to another structure, like a residential garage.
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In Use or Available for Use: The term is broadly interpreted, extending beyond just rental availability. Essentially, if a substantial and permanent structure is capable of being used, such as being habitable or occupiable, it's considered in use or available for use under S.26-102(1).
The ATO is currently considering providing examples to further clarify when an eligible structure would be considered 'in use or available for use.
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