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Tax Tip 42: 'Principal Place of Residence' v 'Main Residence'

Discussion in 'Accounting & Tax' started by Terry_w, 28th Sep, 2015.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    By now you must have come across the acronym PPOR. This stands for Principal Place of Residence.

    There is also the term Main Residence. How do they differ?

    Main Residence is the new term in the new income tax act - ITAA97 or Income Tax and Assessment Act 1997. Up until the new act the Commonwealth law referred to the main residence as the PPOR. This was changed when the new act came into play. The meaning is essentially the same though.

    However with land tax this is state based legislation and most states still refer to the main residence as the PPOR in their Land Tax Acts. e.g. in Victoria see s56 http://www5.austlii.edu.au/au/legis/vic/consol_act/lta200590/s56.html

    therefore strictly speaking when referring to income tax (including CGT) we should be referring to the Main Residence and when referring to land tax we should be referring to the Principal Place of Residence.
     
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    @Terry_w - How will that impact on case law like Paspalley?

    Is land tax levied at the same time in all states ie 12pm on 31/12? Or can you essentially move between two states to meet the criteria at the different census dates?
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not sure what you mean SNM.

    Land tax is levied at different times in different states.
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    With LT being levied at 31/12 in nsw and 30/06 in other states, would it not be possible to relocate every 6 months and claim both as ppor?) ignoring the effect on cgt.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Could be possible in some instances I guess.

    An old accountant told me of a scheme involving trusts and the different tax years in NZ and Australia. An Aussie trust could distribute to a NZ trust before the end of the tax year and then the NZ could distribute back to the Aussie trust before the end of the NZ tax year so that neither trust would even have any taxable income... Apparently it doesn't work any more.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Just as effective as using one credit card to pay off another.
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Poor understanding of AustraIian tax law. Tax is based on residency of the trust.
     
    Last edited: 29th Sep, 2015
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    But land tax in nsw and vic both have a 6 month residency rule.