The Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 has been enacted as Act No. 126 of 2017 (getting Royal Assent on 30 Nov 2017). This Act:
- amends the: Income Tax Assessment Act 1997 (ITAA97) – to provide that travel expenditure incurred in gaining or producing assessable income from residential premises is not deductible, and not recognised in the cost base of the property for capital gains tax purposes.
- to limit deductions for plant and equipment assets used for producing assessable income from residential premises to when the asset was first used for a taxable purpose.
- amends the Foreign Acquisitions and Takeovers Act 1975 to implement an annual vacancy fee on foreign owners of residential real estate where residential property is not occupied or genuinely available on the rental market for at least six months in a 12-month period. This is done by inserting a new Part 6A in the Takeovers Act (a summary of which appears below).
- amends the Taxation Administration Act 1953 (TAA) to make consequential to the Vacancy Fees.
The Housing Integrity Act was introduced with, and passed into law, at the same time as the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017 (enacted as Act No. 127 on 30 Nov 2017).
- it amends the Foreign Acquisitions and Takeovers Fees Imposition Act to impose the vacancy fees provided for by the new Part 6A of the Takeovers Act (see above).
There is a related Tax Month article, with further detail about these Bills.
Extract from the Housing Integrity Bill
– Schedule 3: theVacancy fees for foreign acquisitions of residential land
115A – Simplified outline of this Part [6A]
A vacancy fee is payable by a foreign person for any dwelling on residential land, for any year (called a vacancy year), if the dwelling is residentially occupied for less than 183 days in the year.
A dwelling is residentially occupied on a day in any of the following circumstances (or any combination of these circumstances over the vacancy year):
(a) the foreign person, or a relative of the foreign person, genuinely occupies the dwelling as a residence (whether or not with other persons);
(b) the dwelling is genuinely occupied as a residence under a lease or licence with a term of 30 or more days;
(c) the dwelling is genuinely available for occupation as a residence under a lease or licence with a term of 30 or more days.
The amount of the vacancy fee is found in the Foreign Acquisitions and Takeovers Fees Imposition Act 2015. However, a vacancy fee may be waived or remitted.
The foreign person is required to give a vacancy fee return to the Commissioner of Taxation after the end of each vacancy year for a dwelling. The person must also keep all relevant records for 5 years after disposal of the interest in residential land.
Unpaid vacancy fees for a dwelling may be recovered as a debt, or by the creation of a charge over Australian land in which an interest is held by the foreign person. The charge also secures any unpaid penalties for contraventions of civil penalty provisions under this Part relating to giving annual returns and keeping records.