Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 44 - Build to rent development misuse tax  

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Subdivision 44-B - Build to rent development misuse tax  

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Build to rent misuse amounts

SECTION 44-25  

44-25   Your build to rent capital works deduction amount  

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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:


    Portion of your construction expenditure × Days used
    365

    • 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.
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