Opal and Mascot towers investors could be prevented from negatively gearing their property
Sydney mum and dad investors who own an abandoned apartment in Opal or Mascot towers could lose the ability to negatively gear their property under surprise Federal Government changes, accounting experts have warned.
NSW
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Sydney mum and dad investors who own an abandoned apartment in Opal or Mascot towers could lose the ability to negatively gear their property under surprise Federal Government changes, accounting experts have warned.
New legislation to prevent tax deductions for holding expenses in relation to vacant land — effectively stopping negative gearing on undeveloped properties — was introduced to parliament by the government last month in a bid to address concerns some people were improperly claiming for these costs.
But tax leader at Chartered Accountants Australia and New Zealand Michael Croker has raised serious concerns the changes could impact investors who are currently stuck with a property that cannot be occupied due to safety issues.
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“In light of the recent problems in Sydney with newly constructed apartments impacted by structural defects, for example Opal Towers and Mascot Towers, it has been brought to our attention that these buildings could be inadvertently caught by these provisions as they are no longer lawfully able to be occupied due to the structural defects,” Mr Croker said in a submission to a senate inquiry about the new Bill.
The Mascot Towers complex in Sydney's south was evacuated in June after engineers noticed cracking in the primary support structure. It came six months after Opal Tower in Western Sydney was evacuated on Christmas Eve for similar problems.
Chartered Accountants has argued under a subsection of the law, the definition of “vacant” land could include the abandoned residential towers because they are not currently leased, available to be leased or lawfully able to be occupied.
“We recommend that (the subsection) be tweaked so that newly constructed apartments that are not able to be lawfully occupied because of structural defects are not caught by this subsection,” Mr Croker said in his submission.
Assistant Treasurer Michael Sukkar said the proposed changes would not affect owners of unsafe residential towers in Sydney.
“The explanatory memorandum to the Bill clearly outlines that land is vacant, for the purpose of these amendments, if there is no substantial and permanent building or other structure, such as an apartment block, that is in use or available for use on the land,” he said.
But Labor’s assistant treasury spokesman Stephen Jones said relying on the memorandum because the legislation was “ambiguous” was not good enough.
“That may be what (Mr Sukkar) wants the Act to say, but it’s not what it says … if that’s not what they mean then the legislation needs to be fixed,” he said.
“I’m calling on the government to admit they’ve made a meal of this and immediately fix this bill to protect every day Aussies trying to get ahead.”