The new rules only apply to holding costs related to ‘vacant land’. Specifically, under S.26-102(1)(b), land will prima facie be ‘vacant’ for this purpose if:
“there is no substantial and permanent structure in use or available for use on the land having a purpose that is independent of, and not incidental to, the purpose of any other structure or proposed structure.”
A structure includes a building or other thing that is built or constructed on the land.
The following guidance on the concepts related to what constitutes ‘vacant land’ for the purpose of these amendments is contained in the EM:
(a) Substantial and permanent structure – To be substantial, a building or other structure must be “significant in size, value or some other criteria of importance” in the context of the relevant property. Unfortunately, the EM does not provide detailed guidance on what this means. However, the EM does state that a structure is not substantial if it only has value as an adjunct to another structure. For example, a residential garage is unlikely to be a substantial structure as it would be an adjunct to any future residential property to be constructed.
To be permanent, a structure must be fixed and enduring (and not built for a temporary purpose), even if it is not expected to remain standing forever.
(b) In use or available for use – Unfortunately, the EM also offers no insight on when a structure is “in use or available for use”. Despite this, the ATO has indicated (in ongoing discussions with the NTAA) that this term will be interpreted broadly. More specifically, the ATO confirmed that the concept of being “in use or available for use” is broader than the requirement for a property to be rented or available for rent. At first instance, it would appear that as long as a substantial and permanent structure is capable of being used (e.g., residential or commercial premises are habitable and otherwise able to be occupied) then it will generally be treated as being in use or available for use for the purpose of S.26-102(1).
The ATO is currently considering providing examples as to when it would consider an otherwise eligible substantial and permanent structure to be “in use or available for use”.
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