Blogs

The latest changes in laws that affect you

Legal updates and tips & tricks for anyone to reference. They are not designed as a substitute for legal advice.

Ross Holmes Ross Holmes

Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill

When clients are proposing to transfer properties owned by a Trust back to themselves the issues that arise include the impact of that transfer on possible income tax liability under the bright-line test, and interest deductibility for interest payable under associated loans.

The Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill was introduced to Parliament on 30 August 2022 to clarify problems that have arisen in relation to these issues

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Ross Holmes Ross Holmes

Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill

The Bill seeks to amend the Income Tax Act 2007 and the Tax Administration Act 1994 to, amongst other things:

  • limit the deductibility of interest on residential investment property

  • introduce a shorter bright-line period of five years for owners of new build properties

  • make technical changes to the bright-line rules associated with the recent extension of the bright-line test to 10 years and the proposed introduction of the five-year bright-line test for new builds

  • give employers another option for paying fringe benefit tax on benefits given to employees

  • make remedial changes to the business continuity test for losses so the policy intent is clearer.

It is scheduled to come into effect on 1 October 2021.

From 1 April 2022 for transfers between related parties, including to most family trusts, partnerships, and look-through companies roll-over relief will treat the transferee as having acquired the property on the date (and for the cost) that the transferor originally acquired it for both the bright-line test and the phase-out of interest deductibility. There is no roll-over relief for transfers out of a trust, or for transfers between family members.

Transferring an impacted residential property to a family trust before 1 April 2022 could have significant adverse tax consequences.

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