PPOR Tax Question

Discussion in 'Accounting & Tax' started by alexm, 30th Oct, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
  1. alexm

    alexm Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    492
    Location:
    Sydney
    Hi all,

    How many PPOR projects (new builds or renovations) can an individual do before the ATO considers this a business?

    I know there are many variables and personal circumstances however some general information would be interesting. I'm sure there are plently of people here on PC who may want to know this information.

    Thanks
    Al
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    could be the first one. depends on the circumstances.
     
  3. Ross Forrester

    Ross Forrester Well-Known Member

    Joined:
    30th Oct, 2016
    Posts:
    2,085
    Location:
    Perth, Western Australia
    It is not so much based on a number as opposed to your intention and way of life.

    A defence force employee who gets relocated often and would be expected to have more homes over their lifetime than a farmer - but maybe the farmer is really a developer?

    Intention and facts to support the intention: not a number.
     
    Last edited: 31st Oct, 2017
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    The nature of the activities must all be considered as well as skills, experience and qualifications that are used (eg a builder may be different to a mug renovator). However the base issue the ATO would consider falls into two categories

    1. Isolated profit making transactions
    2. A business / enterprise

    A business may typically exhibit repetition however isolated transactions can also represent ordinary income(v's capital gains) where there is a profit making intention. A single construct of a dwelling and then sale to achieve a profit or income etc may also fall within the scope of an enterprise for GST and also be caught by the $75K threshold AND the GST rules on new residential property which affect not just a new build but also some reno's.

    Personal tax advice may be recommended to determine how you may be impacted. The ATO would otherwise consider self assessment (that is incorrect / flawed) to be reckless and subject to avoidance penalties and timeframes.

    Not too that where there is a profit making intention you cant use the main residence exemption as its not a CGT asset. This is a common mistake