The laws passed parliament in October would likely see SMSFs that had purchased land for development purposes denied deductions on their holding costs until construction was completed. Specifically, vacant land including residential premises will not be deductible the expenses until the premises are leased, hired, licensed or made available for those purposes.
The costs commonly incurred in this scenario included borrowing costs, loan interests, land taxes, council rates and maintaining costs. It is recommended that if an SMSF holds vacant land that tax advice be obtained to determine the extent to which any expenses are tax-deductible to the SMSF.
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Source: Accounts Daily