Private ruling: Expenses associated with holding vacant land
Date of advice: 1 February 2022
Published: May 2022
Date scheme commenced: 1 July 2020

Ruling: Q1: Can you claim a deduction for your portion of the expenses associated with renting out a substantial and permanent structure on vacant land ? | A1: Yes. Section 26-102 of the Income Tax Assessment Act 1997 (ITAA 1997) operates to limit deductions that can be claimed for holding vacant land. Land containing a substantial and permanent structure that has an independent purpose in the context of the land on which it is located will not be considered vacant. In your circumstances the separate primary use of the substantial and permanent structure to generate income is an indication that structure satisfies this requirement. This private ruling applies for the following period: Year ended 30 June 2021

Relevant facts and circumstances: You and your spouse are joint owners of a property. Located on the land is a permanent and substantial structure that was already constructed and considered a part of the land when you and your spouse purchased the property. You lease the structure and the land to an independent third party to use.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 26-102