The Federal Government has introduced legislation to Parliament – backdated to July 1 – that cuts back negative gearing concessions on vacant land.
The legislation will deny deductions for any losses or outgoings incurred through undeveloped land.
The move has caught some by surprise given the Government was strong on not making any changes to negative gearing during the election campaign.
It is projected to raise $25 million each year from 2020 through to 2022.
The $50 million plan to end tax deductions related to vacant land should generally have a limited impact on the industry, and will not apply to expenses associated with holding vacant land if it’s used by the owner or a related entity in carrying on their business, such as primary production or property development.
The changes will also not apply to companies, managed investment trusts, public unit trusts and unit trusts.
In a statement, the Assistant Treasurer said the changes are designed to protect the integrity of the tax system.
“The measure addresses concerns that some people have been improperly claiming deductions for these costs,” the statement reads.
The new Bill will be assessed by the Senate economics committee.