Taxing changes are favouring new builds

Our Experts Answer:

That’s a very big topic, so I will just cover some key things and recommend you meet an accountant to discuss.

1. Construction of new investment dwellings will be “new builds” where interest will be deductible. Brightline will not be an issue unless the land is transferred to a new entity. If it is, five-year brightline will trigger.
2. If you develop to sell, you will need to be GST registered. If the land is restructured there will be no GST claim as there is a second hand good restriction that prevents an input tax claim where land has been acquired from an associate.
3. Structuring is more complex if you intend to keep and rent some and sell some. This is because section CB15 taxes any disposal gains made by associates of a developer if the land sold was ever held on revenue account by the developer. So careful partitioning of the beneficial ownership of the land is required at the beginning of the project to ensure the rentals that will be retained were never “ stock” of the development entity.