Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 (138 of 2024)
Schedule 1 Build to rent developments
Income Tax Assessment Act 1997
11 After Division 43
Insert:
Division 44 - Build to rent development misuse tax
Table of Subdivisions
Guide to Division 44
44-A Object of this Division
44-B Build to rent development misuse tax
44-C When tax is payable
Guide to Division 44
44-1 What this Division is about
This Division removes certain tax concessions for build to rent developments when they cease to be active build to rent developments.
Subdivision 4 4-A - Object of this Division
Table of sections
Operative provisions
44-5 Object of this Division
Operative provisions
44-5 Object of this Division
The object of this Division is to remove certain tax concessions for *build to rent developments when they *cease to be *active build to rent developments.
Subdivision 4 4-B - Build to rent development misuse tax
Guide to Subdivision 44-B
44-10 What this Subdivision is about
You are liable to pay a tax if a build to rent development you own ceases to be an active build to rent development. The tax is on an amount (called a build to rent misuse amount) related to past capital works deductions and withholding amounts (if any) for the active build to rent development.
Table of sections
Liability for tax
44-15 Liability for tax
Build to rent misuse amounts
44-20 Build to rent misuse amounts
44-25 Your build to rent capital works deduction amount
44-30 Your build to rent withholding amount
Liability for tax
44-15 Liability for tax
You are liable to pay *build to rent development misuse tax for an income year if you have a *build to rent misuse amount for the income year.
Note: The amount of tax is set out in the Capital Works (Build to Rent Misuse Tax) Act 2024.
Build to rent misuse amounts
44-20 Build to rent misuse amounts
(1) You have a build to rent misuse amount for an income year, equal to the amount worked under subsection (2), if the amount worked out under that subsection is greater than nil.
(2) For the purposes of subsection (1), the amount is the sum of:
(a) the amount that is the sum of your *build to rent capital works deduction amounts, worked out under section 44-25, for each *build to rent development to which subsection (3) of this section applies for the income year (if any); and
(b) the amount that is 10 times the sum of your *build to rent withholding amounts, worked out under section 44-30, for each build to rent development to which subsection (3) of this section applies for the income year (if any).
(3) For the purposes of paragraphs (2)(a) and (b), this subsection applies to a *build to rent development for an income year if:
(a) the build to rent development *ceases to be an *active build to rent development during the income year; and
(b) you owned the *dwellings of the build to rent development immediately before that cessation.
44-25 Your build to rent capital works deduction amount
Your build to rent capital works deduction amount , for a *build to rent development that *ceases to be an *active build to rent development, is the amount worked out as follows:
Method statement
Step 1. Identify each income year in which, at any time during the year, the *build to rent development was an *active build to rent development.
Step 2. For each of those years:
(a) identify each *construction expenditure area of capital works that are or include the *active build to rent development area of the *build to rent development at any time during the year; and
(b) calculate the amount worked out by the following formula for each construction expenditure area:
where:
active build to rent part , of the *construction expenditure area, is the part of the area that was the *active build to rent development area, or part of the active build to rent development area at any time during the year.
days used is the number of days in the income year that:
(a) any entity owned or was the lessee of the *active build to rent part and used it in the *4% build to rent manner; or
(b) any entity was the holder of the active build to rent part under a *quasi ownership right over land granted by an *exempt Australian government agency or an *exempt foreign government agency, and used it in the 4% build to rent manner.
portion of construction expenditure is the portion of *construction expenditure that is attributable to the *active build to rent part.
Step 3. Reduce the Step 2 amount for each *construction expenditure area, for each year, by the extent to which the *active build to rent part was used only partly for the *purpose of producing assessable income in the year.
Note: This step applies if:
(a) part of the income from the active build to rent part is exempt income; or
(b) part of the active build to rent part was not used for the purpose of producing assessable income or was not available for that use; or
(c) the active build to rent part was not used for such a purpose during a part of the days used period.
Step 4. For each year, add up the amounts worked out under Step 3 for each *construction expenditure area.
Step 5. Add up the Step 4 amounts for each year.
Step 6. Multiply the Step 5 amount by:
(a) if *you are a company (other than a company in the capacity of a trustee) - the *corporate tax rate for the income year in which the *build to rent development *ceases to be an *active build to rent development (the cessation year ); or
(b) in any other case - the maximum rate specified in the table in Part I of Schedule 7 to the Income Tax Rates Act 1986 for the cessation year.
Step 7. Your build to rent capital works deduction amount is the Step 6 amount multiplied by 1.08.
Note: You can have more than one build to rent capital works deduction amount because there can be more than one build to rent development for which you have a build to rent capital works deduction amount.
44-30 Your build to rent withholding amount
Your build to rent withholding amount , for a *build to rent development that *ceases to be an *active build to rent development, is the amount worked out as follows:
Method statement
Step 1. Identify each income year in which, at any time during the year, the *build to rent development was an *active build to rent development.
Step 2. For each of those years, identify each *fund payment made by the owner of the *active build to rent development, or each part of such a fund payment, (if any) that is referable to any of the following:
(a) a payment of rental income under a lease of a *dwelling of the active build to rent development;
(b) a *capital gain from a *CGT event in relation to a dwelling of the active build to rent development.
Note: For the purposes of this step, it does not matter whether an amount must be withheld from a fund payment under Part 2-5 in Schedule 1 to the Taxation Administration Act 1953.
Step 3. For each year add up the amounts of payments, or parts of payments, identified under Step 2.
Step 4. Add up the Step 3 amounts for each year.
Step 5. Your build to rent withholding amount is the Step 4 amount multiplied by 1.08.
Subdivision 4 4-C - When tax is payable
Guide to Subdivision 44-C
44-35 What this Subdivision is about
This Subdivision has rules about payment of build to rent development misuse tax.
Table of sections
44-40 When tax is payable - original assessments
44-45 When tax is payable - amended assessments
44-50 General interest charge
44-40 When tax is payable - original assessments
Your *assessed build to rent development misuse tax is due and payable at the end of 21 days after the Commissioner gives you notice of the assessment of the amount of the *build to rent development misuse tax.
Note: For assessments of build to rent development misuse tax, see Division 155 in Schedule 1 to the Taxation Administration Act 1953.
44-45 When tax is payable - amended assessments
If the Commissioner amends your assessment, any extra *assessed build to rent development misuse tax resulting from the amendment is due and payable 21 days after the day the Commissioner gives you notice of the amended assessment.
44-50 General interest charge
If an amount of *assessed build to rent development misuse tax that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:
(a) begins on the day on which the amount was due to be paid; and
(b) ends on the last day on which, at the end of the day, any of the following remains unpaid:
(i) the assessed build to rent development misuse tax;
(ii) general interest charge on any of the assessed build to rent development misuse tax.
Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953.