Why wait for interest rates to go up before considering a fixed interest loan from 1.89% p.a.?



Now is a good time to consider a fixed interest loan whilst interest rates are low and before improvements in Australia’s economy result in the Reserve Bank of Australia (RBA) declaring higher interest rates. This might not be soon or before 2022, but Governor Philip Lowe of the RBA believes that over time with the economy moving towards full employment and more normalised inflation, interest rates will go up.

As rates continue to stagnate – from 1.89% per annum – and are unlikely to drop, homeowners and property investors should look to take the time to examine locking in a fixed interest loan.

A fixed interest loan usually has a cap on additional repayments, so you will need to read the fine print when fixing your loan.

Individual circumstances vary and you will need to consider whether a fixed loan is right for you, but it could save you money over the term of your loan.

To help you decide whether to fix your loan, consult YML Group for expert financial advice. With expert financial advice, a fixed loan can be an attractive proposition, especially now as Australia’s economic outlook is of a positive upswing.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with fixed interest loans. For more for more information, view our website contact us on (02) 8383 4466 or by using our Contact Us page on our website.

Transfer Balance Caps and what they mean for your Superannuation and Succession Plan



On 1 July 2021, the Transfer Balance Cap (TBC) was indexed for the first time to $1.7 million from the original $1.6 million limit which was introduced on 1 July 2017. Indexation of the TBC means there is no longer a single cap that applies to all individuals. Instead, every member has their own personal TBC of between $1.6 million and $1.7 million, depending on their circumstances. If you are already in receipt of a pension, it is important to review your personal TBC and seek help if you unsure how to calculate, or locate, your personal TBC.

The TBC not only imposes a limit on the amount of capital that you can transfer to the retirement phase of superannuation, but it also has an impact on what happens to your superannuation when you die. The $1.7 million TBC applies to pensions paid to your dependants after you die (called death benefit pensions or reversionary pensions) and it has a substantial impact on estate planning.

When it comes to the TBC, these are some of the main issues that you need to plan for in the event of death:

Given the significant shift in the landscape with respect to SMSFs and estate planning, it is also strongly recommended that trustees have their SMSF trust deed reviewed to ensure maximum flexibility when dealing with excess TBC amounts, rollover of death benefits, reversionary and child pensions. This should be done alongside the review of any binding death benefit nomination(s) you have in place to ensure that they too are valid and provide the certainty in how your death benefits will be dealt with upon your death.

The payment and tax treatment of death benefits paid from a SMSF has traditionally been a complex area and certified financial advisors like YML Group can help make this area clearer to understand.

How does the new TBC affect your superannuation and succession plan?

Consult YML Finance to help you review and assess your succession plan. YML’s expertise in superannuation will ensure you have all you need to know about how TBC will affect you.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your superannuation. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

It’s time to apply for a Director Identification Number (DIN)



As part of the 2020 Budget – Digital Business Plan, the Australian Government requires all Australian company directors to mandatorily register for a Director Identification Number (DIN).

A DIN is a unique number assigned by the Australian Taxation Office (ATO) to a director for eternity, even if you change companies. A DIN your unique identifier. Any director of a company or of a registered entity under the Corporations Act 2001 must acquire a DIN. It is free to apply.

A Director Identification Number is: The new digital registry system, Australian Business Registry Services (ABRS), is maintained by the ATO and will enable names and certain details of company directors to be known to regulators, external administrators, shareholders, employees, as well as creditors and consumers.

The purpose of this DIN register is to help: A director will be able to view and update their details. From November 2021, a director may log in to ABRS online to do so.

1. How to apply?

*Online application

    Applicants within Australia

    The fastest way to receive your director ID is to apply online.

    To complete your online application, you need the following information to verify your identity.
    • A myGovID with either a Standard or Strong identity strength. If you don’t have one, visit How to set up myGovID
    • An individual Australian tax file number (TFN). Providing your TFN is optional, but it speeds up the process.
    • Your residential address, as recorded by the Australian Taxation Office (ATO).
    • Answers to two questions based on details ABRS knows about you, see more details to verify your identity.
How to apply if you cannot get a myGovID?

If you can’t get a myGovID with a Standard or Strong identity strength, the best way to apply for a director ID will depend on your situation.

*Apply by phone

    Applicants within Australia

    You can apply by phone if you have:
    • an Australian tax file number (TFN)
    • your residential address as held by the Australian Taxation Office (ATO)
    • answers to two questions based on details ABRS knows about you, see more details to verify your identity.
    • two Australian identity documents – one primary and one secondary.
When you have the information you need to apply, Contact ABRS office.

*Apply with a paper form

    Applicants within Australia

    If you can’t apply online or over the phone, you can apply using a downloadable form– Application for a director identification number (NAT75329, PDF, 306KB). This is a slower process and you will also need to provide certified copies of your documents to verify your identity.

    Applicants outside Australia

    In addition to the information requested on the application form, you will need to provide certified copies of one primary and one secondary identity document.

          Primary documents
    • Foreign birth certificate
    • Foreign passport
    Australian full birth certificate (extracts and commemorative certificates are not acceptable) Australian passport (including passports that have expired in the past two years)

          Secondary documents
    • National photo identification card
    • Foreign government identification
    • Driver’s licence, as long as the licence address matches the address details on your application
    • Marriage certificate, but if you use this document to verify your change of name, you can’t use it as a secondary document.
    If you have changed your name, you must provide another document showing the change, such as a:
    • marriage certificate
    • deed poll
    • change of name certificate.
    Note:
    • Do not send original documents as these will not be returned to you.
    • If you can’t provide certified copies of your paper identity documents with your application form please  contact ABRS office.
    • If you don’t meet your obligations as a Director there may be civil or criminal penalties or you may be issued with an infringement notice.

2. Once you have your Director ID please print or save a PDF file of your Director ID.

3. Send your Director ID PDF file to contact@ymlgroup.com.au to update our record.

Should you need assistance with your application for a DIN, YML Group has the expertise to determine your company position status and to assist you with your DIN application.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your Director ID. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Economic Stimulus 2021 – Latest Government Incentives – What can your business receive?



All states and territories

JobMaker Scheme

The JobMaker Scheme offers an incentive for small- and medium-sized businesses to expand their workforce and employ younger Australians in need of a job and, in turn, deliver growth potential for those businesses.

Eligible employers must register with the Australian Taxation Office (ATO) who are administering the scheme. JobMaker Hiring Credits are paid each quarter – from 1 February 2021 – for each eligible additional employee hired from 7 October 2020 until 6 October 2021.

Eligible employers may receive a JobMaker Hiring Credit of $200 a week for an employee aged 16 years to 29 years of age AND $100 a week for an employee aged 30 years to 35 years of age.


SME Recovery Loan Scheme

The SME Recovery Loan Scheme was developed to aid small- and medium-sized enterprises that have an annual turnover of less than $250 million. All applicant businesses must have accessed JobKeeper during the first quarter between 4 January 2021 and 28 March 2021.

A loan under the SME Recovery Loan Scheme may be used for a broad range of business means, including but not limited to:             What is on offer? Loans issued under this scheme may NOT be used for purchasing residential property, for purchasing financial products, to lend to another entity nor to lease, rent or hire existing assets that are more than 50 per cent depreciated.


New South Wales

NSW Small Business Fees and Charges Rebate

Financial incentives offered by the NSW Government include eligible businesses being offered up to $1500 in rebates to offset the cost of specific NSW state and local government fees and charges incurred during the running of a business.

Sole traders and small business owners must: Whilst running a business, NSW state and local government fees and charges befall most small business owners and sole traders: costs such as council rates, outdoor seating fees, event fees, food authority and liquor licences and tradesperson licences.

Eligible applicants can lodge multiple claims – as these types of expenses arise and are paid – until the $1500 rebate cap is reached.

The NSW Government stipulates that for a fee or a charge to be eligible, it must be due and paid from 1 March 2021.

There are some costs that may NOT be claimed:
NSW Performing Arts COVID-19 Support Package

Urgent financial assistance is available now for the performing arts industry, including venues, producers, promoters who have had to postpone or cancel performances due to public health ordered restrictions from 26 June 2021 to 30 September 2021.


COVID-19 Business Support Hardship Review

If your business or not-for-profit organisation was not eligible for the 2021 COVID-19 business grant, COVID-19 micro-business grant or JobSaver payment, you may still be able to access financial support by submitting your details to the COVID-19 business hardship review panel.

Businesses that did not meet the eligibility criteria for the COVID-19 business support schemes, and businesses that had their applications refused, may now be eligible to apply to the panel for special consideration. Businesses must be able to demonstrate financial hardship as a result of NSW public health orders.


2021 COVID-19 Land Tax Relief (Jul – Dec 2021))

NSW residential and commercial landlords who provide rent relief – between 1 July 2021 and 31 December 2021 – for tenants experiencing financial hardship can apply for up to 100 per cent land tax deduction for the 2021 land tax year. This financial relief is intended to reduce a landowner’s land tax payable for 2021.

A commercial landowner must be leasing land to a commercial tenant with an annual turnover of up to $50 million and who is eligible to receive a COVID-19 Micro-business Support Grant, the 2021 COVID-19 NSW Business Grant and/or the JobSaver Payment.


Dine & Discover NSW Vouchers

The NSW Government continues its Dine & Discover NSW voucher program. These vouchers can be used at participating NSW businesses in the hospitality industry. Any NSW resident aged 18 years and over may apply for the vouchers.

Each applicant may receive:

2 x $25 Dine NSW vouchers for takeaway meals, restaurants, cafes, bars, wineries, pubs and clubs, as well as,

2 x $25 Discover NSW vouchers for entertainment, recreation, cultural institutions, live music events and arts venues.

Vouchers are available to all NSW residents aged 18 or over and are valid to 30 June 2022.

Takeaway businesses are now eligible to register for the scheme. For more info visit the link below.

For more info visit https://www.service.nsw.gov.au/transaction/register-business-dine-discover-nsw 

NSW Payroll Tax Relief

NSW payroll tax liabilities are currently deferred for all NSW employers until 14 January 2022.


The NSW Government has announced – not yet finalised – a financial incentive to assist businesses with payroll tax during the 2021-22 financial year. For payroll tax customers with a total 2021-22 Australian wages amount of up to $10 million and whose annual turnover can be shown to have declined by at least 30 per cent, their annual payroll tax liability would be reduced by 50 per cent.

The NSW Government will provide full more information on this 50 per cent reduction when the 2021/2022 annual reconciliation becomes available.

For more info visit https://www.revenue.nsw.gov.au/news-media-releases/covid-19-tax-relief-measures/covid-19-coronavirus-and-payroll-tax

NSW Accommodation Support Grant

Accommodation provider support payments are now available for eligible tourism accommodation providers that have lost business during the school holiday period. Assistance will be based on the number of cancelled room nights.

Two different grants amounts are available: Eligibility
Alfresco outdoor dining grant

The NSW Government has announced a new initiative to support food, beverage, entertainment, arts and cultural businesses impacted by COVID-19 and the recent lockdown.

The Alfresco Restart package will include $5,000 grants for 5,000 hospitality businesses to use towards outdoor dining.

For more information on outdoor dining, visit the NSW Government's website.

More information on the Alfresco outdoor dining grant will be available soon.

Summer Holiday Stock Guarantee

The Summer Holiday Stock Guarantee grant is part of the Economic Recovery Strategy and aims to give business owners the ‘confidence’ to navigate reopening and the months that follow.

Eligible businesses with a turnover rate between $75,000 and $50 million can apply for a grant of up to $20,000 to compensate for loss of perishable stock or claim $10,000 for reduced capacity to sell non-perishable items in the event of a local lockdown.

Additional information on the stock guarantee and rebate will be available soon.

Queensland

 2021 COVID-19 Business Support Grants | Queensland

A joint Queensland and Australian Government support package for Queensland businesses has been announced. The package includes support for non-employing sole traders and expands on support for eligible small and medium businesses, and large tourism and hospitality businesses.

Funding amounts will be based on the payroll size of eligible businesses and not-for-profits:
Tourism and Hospitality Sector Hardship Program

The $110 million Tourism and Hospitality Sector Hardship Program will provide grants to both eligible tourism and hospitality businesses, and major tourism attractions and experiences facing significant financial hardship as a result of COVID-19 travel restrictions and interstate lockdowns.

There are 2 types of grants available:
COVID-19 Border Business Zone Hardship Grant

Businesses located in the border zone that are eligible for a COVID-19 Business Support Grant may receive additional funding if they can demonstrate being impacted by the QLD-NSW border closure.

Areas eligible for border business zone support include:

Coolangatta, Currumbin–Tugun, and Currumbin Waters

border towns of Wallangarra, Goondiwindi and Mungindi (Queensland)


Victoria

Commercial Landlord Hardship Fund 3 | Business Victoria

Eligible small landlords and their tenants must have agreed a rent waiver or non-payment of at least 50% of the agreed rent relief provided between 28 July 2021 and 15 January 2022 under the Commercial Tenancy Relief Scheme.

What do you get?

Grants of up to $6,000 per tenancy, and up to $10,000 for landlords experiencing acute hardship.


How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with government financial assistance. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Australia’s Company Tax Rate lowered to 25%



In the 2020-21 financial year the Australian company tax rate reduced from 27.5% to 26%. A further reduction from 1 July 2021 to 25% means eligible companies in the current financial year stand to pay this lower company tax rate of 25%.

A Federal bi-partisan decision means companies will benefit from the 25% tax rate five years earlier – than initially legislated for financial year 2026-27. New legislation now means a company that is a ‘base rate entity’ (BRE) from the 2017-18 income year or a small business enterprise (SBE) during the 2015-16 and the 2016-17 income years can apply for the lower company tax rate. Otherwise, the full company tax rate of 30% applies to all those who fall outside of these definitions.

To define who is eligible for reduced company tax rates, the BRE classification was created to be used from 1 July 2017. A BRE is defined after a test of a company’s passive income – such as interest, net capital gains, rental income, as well as dividends and royalties (some exceptions do apply).

Companies that are BREs must meet the following criteria for an income year: It is worth noting that Australia’s company tax rates may be applied to companies including corporate limited partnerships, strata title bodies corporate, public trading trusts and corporate unit trusts.

All other companies not classified as BREs will incur the full company tax rate of 30%. Notably, investment companies receiving only passive income and no trading income do not qualify for lower company tax rates.

In a company structure, individuals who draw money out of their company must declare that money as income (salary, wages or dividend) and this can affect the company’s right to tax deductions and reduced tax rates. In some instances, the Personal Services Income (PSI) rule may be applied. YML Group can guide you to determine your accessible income for the purpose of your company qualifying as a BRE.

If ever there was a time to incorporate a company or make hay while the sun shines in your existing company, now is the time and that means taking advantage of Australia’s lowest company tax rate of 25%. If you are unsure if your company is a BRE or SBE, then let YML Group assist you with making certain that your company can make the most of this opportunity. And if you want to start a company, YML Group has the expertise to set one up and ready you for the reduced tax rates and incentives a company has to offer.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your company tax. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

It’s time to apply for a Director Identification Number (DIN)



As part of the 2020 Budget – Digital Business Plan, the Australian Government requires all Australian company directors to mandatorily register for a Director Identification Number (DIN).

A DIN is a unique number assigned by the Australian Taxation Office (ATO) to a director for eternity, even if you change companies. A DIN your unique identifier. Any director of a company or of a registered entity under the Corporations Act 2001 must acquire a DIN. It is free to apply.

A Director Identification Number is: YML Group can advise you if you are unsure of your position in a company or whether you are required to apply for a DIN.

The new digital registry system, Australian Business Registry Services (ABRS), is maintained by the ATO and will enable names and certain details of company directors to be known to regulators, external administrators, shareholders, employees, as well as creditors and consumers.

The purpose of this DIN register is to help: A director will be able to view and update their details. From November 2021, a director may log in to ABRS online to do so.

Next Steps

The ATO requires all directors and would-be directors to register for a DIN.

A request for your Tax File Number (TFN) will be made of you and this will assist with the verification of your identity as part of the process of acquiring a DIN.

Should you need assistance with your application for a DIN, YML Group has the expertise to determine your company position status and to assist you with your DIN application.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your Director ID. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Insurance in your Superannuation Policy



Do you have personal – Life, Total and Permanent Disability (TPD), Income Protection – insurance? If you think ‘No’, then you might want to think again and check your superannuation policy. Australians are afforded a cost-effective means of having insurance cover within their superannuation policies. This is important because Australians have historically been fundamentally underinsured, if not uninsured.

What do you get from having insurance cover in your superannuation policy?

There are many advantages:

What insurance cover is included?

For most Australians, insurance in superannuation provides a valuable safety net with most superannuation funds automatically providing cover for Death (Life) and TPD. Whilst some cover levels and the calculation of premiums are individual to a fund, generally three insurances are included for (default) specified levels of cover without requiring medical assessments:

LIFE

Life insurance, sometimes called Death insurance, means your superannuation account will receive a lump sum payout in the event of your death or a terminal illness. Life cover usually ends when you are 70 years of age.

TPD

Total and Permanent Disability insurance means your superannuation account will receive a benefit amount in the event of your suffering a disability that prevents you from working, or that you are unlikely to ever work, post-disability. TPD cover usually ends when you are aged 65 years.

INCOME PROTECTION

Income Protection insurance, also known as Temporary Disability (TD) insurance, means you will continue to receive a substantial portion of your pre-disability salary for a period – up to a determined number of years or up to a certain age – to assist you to maintain your financial responsibilities whilst you recover.

Do you need more insurance than what is offered?

Some extra insurances like Trauma insurance or a more comprehensive Income Protection insurance might be something you need for your personal circumstances. If you buy any of these insurances, including the main three mentioned above, from external insurers – that is, beyond the scope of your superannuation, then cover generally continues until you no longer pay the premiums to the insurer.

Are all superannuation fund members automatically insured?

No. There are some exceptions for younger members (under 25s) and superannuation accounts with low balances.

What can you do to ‘know YOUR insurance in superannuation’?

Consult YML Group to help you review and assess your insurance requirements and how your superannuation policy provides insurance for you. YML’s expertise in superannuation will give you a clear understanding of the insurance in your superannuation policy.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your superannuation. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Single Touch Payroll (STP) Phase 2: What Your Business Will Have to do to Comply and How YML can Help



YML offers your business YML’s specialist Australian-focused Bookkeeping Service via Business Process Outsourcing (BPO). As the latest Federal Government reforms expand the financial reporting requirements of all Australian businesses, you can have a dedicated virtual Bookkeeper – ready to chat with you anytime you want and as often as you need – to keep your business on track with the ATO’s reporting protocols.

Single Touch Payroll (STP) – Phase 2: Compliance

STP Phase 2’ is an anticipated expansion of the current STP system, initially announced in the 2019-20 Federal Budget. Phase 2 is all about centralising and requiring more detailed information from employers via STP.

In one way, Phase 2 will reduce the reporting burden on those employers who currently need to provide information to multiple government agencies because Phase 2 will require employees’ payments information to be provided only via STP.

It will no longer be adequate to report remuneration totals

The major adjustment for businesses will be ‘Disaggregation of Gross’. Currently, businesses report a gross amount of remuneration paid to employees, essentially a total of many different payment categories, which will be required in Phase 2 to be split into separate category components.

This gross salary/wage figure will require a business, in the first instance of data entry, to accurately classify all payments made to an employee. Where previously, one figure reported was satisfactory, the ATO will require – under Phase 2 – a breakdown of all specific payment types. This comprehensive breakdown is expected to ensure that those payment types that affect social security are treated properly.

Payment types to be separately reported are Gross, Paid Leave, Allowances, Overtime, Bonuses and Commissions, Directors’ Fees, Lump Sum W, and Salary Sacrifice.

When does Phase 2 start?

You will need to transition from Phase 1 to Phase 2 by the mandatory start date, 1 January 2022.

Your Digital Services Provider (DSP) will need to ensure your software is Phase 2-enabled.

For more information, see STP Phase 2 employer reporting guidelines

Your Future, Your Super: Compliance

In the 2020-21 Federal Budget, the Federal Government announced superannuation reforms under the program, ‘Your Future, Your Super’. This new 4-element reform will include another system check to be undertaken by employers.

From 1 November 2021, if a new employee does not stipulate a superannuation account for the deposit of compulsory employer contributions, then an employer must check with the ATO whether an existing superannuation account exists for the new employee. Such an existing account is known as a ‘stapled super fund’ and is to be used by an employer to deposit the superannuation guarantee where no other superannuation fund is named by a new employee.

How can YML help you to meet your STP Phase 2 and ATO reporting obligations?

YML’s Bookkeeping Service is a leading virtual process manager of all aspects of bookkeeping. A high qualified, specially trained, Australian-focused bookkeeper is available to partner with you and your business to streamline all reporting via STP, especially the new Phase 2. Our staff will manage your bookkeeping and stay connected with you via video chat or via phone as often as you choose.

Let YML take the burden of complying with the ATO’s reporting protocols of you. We will ensure that your STP reporting is completed accurately and in full compliance with your ATO obligations. This Phase 2 is all about accuracy, classification and timely reporting. With YML Bookkeeping Service, you will save time spent stressing over the day-to-day financials and gain peace of mind as ‘STP Phase 2’ advances to a more expansive bookkeeping exercise.

 How can YML help?

Talk to our YML Business Services Team today to see how YML Group can assist you with STP and Bookkeeping. For more information, view our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.

YML Finance – LOOK at these loan Interest Rates…



SMSF Loan

YML Finance can offer you a Self-Managed Superannuation Fund (SMSF) loan starting at a low interest rate of 3.99% per annum. If you own commercial or residential property in your SMSF portfolio, that could mean a big saving to your SMSF.

Home Loan

Buying a home or refinancing your current home loan, YML Finance is offering you interest rates from 1.89% per annum. What a way to head into summer and 2022, by reducing the interest in your mortgage repayments.

Your Next Step

Contact YML Finance about interest rate options to improve your financial outlook. We are here to help you process an application and throughout the life of a loan.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with finance loans. For more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

Deduction of Interest on Vacant Land – Draft Ruling



If you are an individual property investor or developer, there are times when a land holding lies dormant and cannot be occupied or rented due to demolition, a renovation or construction of a residential dwelling on the property.

Expenses deductions, including interest, relating to holding vacant land have been denied or limited under section 26-102 of the Income Tax Assessment Act 1997 by the Australian Taxation Office (ATO) since 1 July 2019.

What does the section 26-102 say?

Since 1 July 1997 when there is no income during the time land remains vacant, this ruling currently applies. Loss or outgoing relating to holding land – Section 26. Subsection 26-102(1):

“…clarifies that any interest or borrowing costs to acquire land are included as a cost of holding land. Examples of other costs of holding land include council rates, land taxes and maintenance costs.

And Section 27:

In the context of section 26-102, we do not consider the costs of constructing a substantial and permanent structure on the land, or any interest or borrowing costs (to the extent they are associated with construction), to be a loss or outgoing related to holding land.”

Due to the COVID-19 pandemic, the ATO has had to re-prioritise its work. This included delaying public advice and guidance rulings. One of those rulings is the Draft Taxation Ruling TR 2021/D5 which addresses the vacant land expenses rules in section 26-102 of the Income Tax Assessment Act 1997.

What does the Draft Taxation Ruling TR 2021/D5 say?

The draft ruling sets out proposed compliance approaches for various holding circumstances and when finalised and implemented would ideally give landowners greater scope to deduct interest on their vacant land holding.

The draft ruling also outlines key inclusions for interest deductions, such as land held by a company, or a business where the land is used to carry on a business. However a  Self-Managed Superannuation Fund (SMSF) is not able to claim interest deductions for holding vacant land.

There are examples of various situations to illustrate the extent of other key exclusions, such as land being bought and there being a delay until the dwelling on it can be lawfully occupied or leased. In such a circumstance, the landowner would not be prevented from claiming interest under section 26-102 because a deduction could be claimable under section 8-1 (General Deductions) of the ITAA 1997.

The draft ruling outlines its compliance approach towards short periods of vacancy between residential leases due to, for example, maintenance and/or repair work being required. In such a vacancy situation, the land could be considered not vacant and therefore interest deduction would not be denied under section 26-102, so long as deductibility could otherwise fall under section 8-1.

In addition, borrowing costs and interest on construction loans taken out to build a residential dwelling on vacant land would be exempt under section 26-102 and therefore borrowing costs and interest could be claimed by the landowner.

The draft ruling was released in December 2020 for consultation and stakeholders may provide feedback until 17 September 2021. The draft ruling will thereafter be available for public comment.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your vacant land interest deductions. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.