@Paul@PFI and i have discussed this one. My reading of the Act is that if you entered into a contracr prior to May 2017 BUT the property was settled between May 2017 and 30 june 2017 then the property wasnt used as a rental and the division 40 depreciation allowances are not available. Its an interesting one. Will be discussing with tax counsel friend this weekend to get their opinion
We concur, so far. We'll most likely be releasing our official statement next week. It has all been a bit confusing but we believe we understand the full scope of things now. The ATO is going to have an interesting time of it, come July 2018. There are going to be a lot of people testing these changes.
just spoke to them ok so deal is if the asset was held at budget night AND no depreciation deduction was available for the 2017 financial year (in this case if settled after 30 June 2017 it wont be) then you cant claim Division 40 depreciation deductions. what a total mess this has become. heaven help anyone preparing their own tax return.
This is in line with what Ken Mansell was saying in the AIQS webinar this week about people who rent out their PPOR. So somebody has owned the property for a while - pre 9/5/17 purchase, of course. They move out and turn it into a rental. If they move out after 1/7/17, they can't claim Div 40. They would have needed to have started renting it out in the 16/17 tax year.
I'm surprised how quickly they have got on top of the changes. I think it could be because I have filtered things and introduced them bit by bit. After that webinar on Wednesday, there a few more things to tell them and they took them on board pretty easily. The bigger problem will be with small operators who will not understand the changes or will ignore them and leave it up to accountants to adjust the Dep schedules when they lob on their desk next tax season.
I keep going to Like your posts before remembering that, no, I don't like the situation very much at all. Every obstacle is an opportunity, right?
However if its an OTP acquisition this issue may not apply. There are some weirdly worded exceptions with the word and appearing too often for my liking. In its simplest form an acquisition within 2 years of the budget may be affected by the issue Mike refers to. The issue for a purchase in the 2017 year (pre-budget) is that if the asset is not first used for rental in the period between acquisition and 30 June then its not considered a new asset unless its a asset deemed by the change to be new...ie OTP etc and generally this only applies to issues where the buyer acquires from a developer. Note the bold item....and the underlined bit The changes will apply from 1 July 2017 to: previously used plant and equipment acquired at or after 7.30 pm on 9 May 2017 unless it was acquired under a contract entered into before this time plant and equipment acquired before 1 July 2017 but not used to earn income in either the current or previous year. I believe there may be grounds for a property acquired with an existing tenancy to maintain the deduction BUT an existing QS report may be needed. A new one may fail. Otherwise how may someone have the issue of acquisition in the 2017 year but then the test looks backwards ?? ...The issue may allow existing tenancies a carve out if the tenant comes with the new property. Thats why I believe ATO will need to issue a number of rulings
I've been reading these posts and what stands out is how confusing the public is going to be...and from the Governments point of view - very little reward. Dumb Dumb Dumb!
