When deciding if a structure on land serves an independent purpose, it's based on facts. According to explanatory material (EM), structures like pipes or residential garages, which support or enhance another structure's use, don't meet this requirement. On the other hand, structures like woolsheds for shearing and grain silos usually have their own purpose, separate from other structures on the land. The EM notes that if a structure primarily generates income, it likely serves an independent purpose (EM paragraph 3.24).
For a loss or expense related to land to be tax-deductible, the land must have a substantial and permanent structure that serves an independent purpose and is either in use or available for use when the loss occurs (refer to S.26-102(1)). However, if a taxpayer incurs a loss after selling the land (like paying post-sale interest on a loan shortfall), it can still be deductible if the land wasn't considered "vacant land" just before they sold it (S.26-102(1)(b)(ii)).
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