iscover Look before leaping amid property tax changes
TaxOne tax expert breaks down what taxpayers and accountants must know amid property tax changes on an Under the Hood podcast episode.
On an Under the Hood podcast episode, head of education at Accurium and TaxBanter Lee-Ann Hayes (pictured) spoke about the biggest developments impacting tax in property, including the implications of the ATO’s holiday homes guidance, granny flat arrangements, the Morton case, and the federal budget’s impact on property tax.
Hayes called these changes exciting, noting that the biggest changes of her lifetime occurred during the business tax reform era.
Hayes said the fact that valuation applies to pre-CGT assets caused her to nearly “fall off her chair” on budget night.
“I never in my wildest dreams thought we'd be bringing the pre-CGT assets within the realms of CGT; they always seemed sacrosanct.”
Off the back of the Morton case, where a taxpayer’s income from a large land subdivision was found not to have been taxable income, Hayes said that accountants need to ensure that they are having the right conversations with their clients.
“What I'd be looking out for is obviously getting to the real intent from your clients and finding out, well, what is the reason for us realising the asset? This is not going to help those clients who have gone, seen an opportunity and exploited it.”
During the episode, Hayes spoke about the queries she has faced from clients seeking a main residence exemption for granny flats on their property.
“The Tax Office's private rulings seem to suggest that it's actually just not part of your main residence at all, so it never can actually get the main residence exemption. So to me … that's quite a significant change.”
“People that have lived in their property since pre-1985 who never would have even thought about main residence exemption really being a problem because their property was pre-1985 anyway and they go and put a granny flat there …”
“What we now know is that actually it is going to get caught under the new rules if they get through as currently drafted. And now we've got this situation again where we could be subject to CGT and not even realise it.”
“Pay attention, start learning, but don't panic yet ... Don't make decisions until you actually see the law, because who knows, things could change, and they might actually step back from it all.
“You'd hate to have made a decision based on what you think the law is going to look like and then it looks something different.”
Want to see more stories from trusted news sources?Make Accountants Daily a preferred news source on Google.
Carlos Tse
Carlos Tse is a graduate journalist writing for Accountants Daily, HR Leader, Lawyers Weekly.