Date posted: 4/11/2019

Submission on holding costs for privately used land that is taxable on sale

CA ANZ recently provided feedback to Inland Revenue on ‘Holding costs for privately used land that is taxable on sale’.

Chartered Accountants Australia and New Zealand recently provided feedback to Inland Revenue on their ‘Holding costs for privately used land that is taxable on sale’ tax policy consultation document.

The issues being considered here are the rules for the deductibility of holding costs for land that is taxable on sale and is used privately (in whole or in part) while it is held. In the consultation document, officials concluded that while apportioning holding costs would be the most accurate option, their preferred approach would be to deny deductions for holding costs for periods of private use.

CA ANZ disagrees with the official’s approach and have suggested what we believe to be a pragmatic alternative, that is for holding costs to be deductible at the time of sale, where there is a loss, there should be no deduction for the loss (and cannot be offset against other income).

In our view an ad hoc basis for reviewing the land rules is not appropriate and a comprehensive review should be undertaken.

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