LawWorks News

Tax Changes which will affect our property investor clients - April 2011

On 1 April 2011 a number of changes came into effect.  There are changes to:

  • building depreciation;

  • qualifying company rules; and

  • loss attributing qualifying (LAQC) rules.

The LAQC rules have been repealed and a new structure known as a "Look Through Company” has been introduced.

These changes could have significant tax implications for our property investor clients and we urge you to contact your tax advisor.  Accounting advice will be essential in all cases.  In some cases you will be advised to restructure the property ownership and transfer the property into sole or joint ownership.  In that case we recommend that you consult us as early as possible.

New GST rules have also been introduced which are effective from 1 April 2011 and provide for compulsory zero rating of land transactions where both parties are GST registered.  There are very limited exceptions to the rule.  In most cases this will streamline the transaction.  

As always, we recommend that clients consult us prior to signing an Agreement for Sale and Purchase, particularly in relation to a commercial property.  In most cases we will recommend that the purchase price is expressed to be "plus GST, if any” to provide for the situation that the purchaser is not GST registered on settlement.  

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