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Tasmania - Common Property Depreciation

Discussion in 'Accounting & Tax' started by Paul@PFI, 11th Mar, 2016.

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  1. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    I came across a view in the most recent BMT Maverick newsletter (issue 39) which appeared to indicate that Tasmanian property may not obtain a tax deduction associated with Div 40 and Div 43 deductions for the share of common property unlike taxpayers in other states.

    This got me thinking - Tax law isn't state based so is it a strata law issue ?

    Is there a strata law that applies in Tassie that effectively stops a taxpayer accessing this deduction ?? eg the OC "owns" that common property where other states use different strata laws. And if that is the case does this same law also effectively exclude a share of the common land from the individual share of land value for land tax ??
     
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  2. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Well spotted, Paul.

    I'm providing a link to that article, from which we've removed that detail since going to print: Deductions in Shared Assets | BMT Tax Depreciation

    At the time of printing it was our interpretation that this was the case but recently the ATO have clarified that they now treat all strata schemes equally on a nationwide basis. Here's a link to that:

    https://www.ato.gov.au/law/view/view.htm?docid="TXR/TR20153/NAT/ATO/00001"

    I'll paste in the most relevant part below. The long and the short of it is that all strata common area is eligible now.

    Chris


    Aforementioned section:

    95. In accordance with this practice, and notwithstanding the differences in the State and Territory legislation, the Commissioner will apply a consistent treatment across all strata schemes, such that proprietors in strata schemes registered under all the legislation set out in Appendix 2 of this Ruling can return income and claim deductions on the basis that they hold the legal and beneficial ownership of common property.[19]
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Sorry to draw attention to the issue but good to hear its explained. I wasn't aware of the former treatment.

    Does this mean taxpayers with Tasmanian property should get a revised QS report that now includes common property that may have been excluded ?
     
  4. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Good question, Paul, and sorry for the delayed response. I've been out of the office.

    We will be updating any reports that we are required to. It's in our favour that the number of strata titled properties in Tasmania is relatively quite low!