Federal Budget 2018: Tax (investors)

Federal Budget Tax Investors

Federal Budget 2018 Initatives: Tax (investors)

Removing the capital gains discount for managed investment trusts

Effective 1 July 2019

Managed Investment Trusts (MITs) and Attribution MITs (AMITs) will be prevented from claiming the 50% capital gains discount at a trust level from 1 July 2019. MITs and AMITs will continue to be able to distribute realised capital gains to beneficiaries. Who are still able to apply the 50% capital gains tax discount for proceeds from assets that are held longer than 12 months.

Deductions denied for vacant land

Effective 1 July 2019

As an integrity measure to address concerns that dedications are being improperly claimed for expenses associated with vacant land, the Government will deny deductions such as borrowing expenses and council rates, where the vacant land is not genuinely held for the purpose of earning an assessable income.

Denied expenses that would ordinarily be included in an asset’s costs base, may continue to be included for capital gains tax (CGT) purposes when sold.  Expenses that would not ordinarily be included in the costs base of the asset for CGT purposes and will now also be denied a deduction will continue to be excluded in the cost base calculation.

This initiative will not apply to expenses associated with holding land that are incurred after:

  • A property has been constructed on the land, it has received approval to be occupied and is available for rent; or
  • The land is being used by the owner to carry on a business, including a business of primary production.

This initiative will apply to expenses associated with holding land that is:

  • Held for residential or commercial purposes.

Please note:the ‘carrying on a business’ test will generally exclude land held for commercial development.

This article is published by Modoras Accounting (QLD) Pty Ltd ABN 81 601 145 215. This article contains general information only and is not intended to represent specific personal advice (Accounting, taxation, financial or credit). While every effort is made to ensure that the information is accurate, users must be aware that some information may not be accurate or is no longer current. No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional advice before making any financial or business decision.

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