Land Tax - Company Owner (CGT Free)

Discussion in 'Accounting & Tax' started by [email protected], 12th Aug, 2016.

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  1. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

    18th Jun, 2015
    Had an interesting interaction today with a PC person. A fairly typical issue - Seeking to use a trust / Co etc to save land tax as thresholds had been used etc.

    What made this one different was it for commercial property to be used in a business. The immediate concern posed by the accountant and the client was the CGT discounts aren't available to a company so they had ignored use of a company (which gets a separate LT threshold).

    Often an indicator that advice from a property savvy tax adviser hasn't been obtained. While the general CGT discount isnt available to a company, the company that owns the property can still be a small business affiliate of the human owners and still access future profits that may fall under the Small Business CGT Concessions. In other words the CGT profit in the company may still be CGT free, reduced or even deferred in some circumstances.

    Early advice on this is essential and there are many conditions, limits and catches. The major one is that the property must be an active CGT asset used in a small business...Cant be a passive investment that just earns rent. Example : Dave Pty Ltd owns a factory that is rented to the unrelated Jam Co who make Jam. Dave Pty Ltd just earns rent. That fails. However if Dave Pty Ltd owns the property and its used by Daves Jams Pty Ltd (a related entity) and it houses the business then it may be an active asset.