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Limiting deductions for “vacant land”
Published on 01 May 20 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
Amending legislation to limit deductions for “vacant land” operates by adding a qualifier to every provision in the tax Acts that provides for a deduction. Also, there are wider implications than merely losing some deductions, and consequences arise from the interaction with the capital gains tax regime. Although some welcome exceptions were introduced during the legislative process, traps remain for the unwary, including new tax risks for smaller-scale property developments. This includes circumstances where land with completed houses or units, incredibly, will be regarded as “vacant”. With no grandfathering, options may be limited for existing holdings of land, and some established structuring norms must now be re-evaluated. This article sets out what constitutes “vacant land”, how the new law operates to deny deductions, the available exceptions, and the broader consequences. A number of practical examples illustrate the outcomes, which then shine a light on weighing up alternative structuring options for future acquisitions of land.
Author profile
David Montani CTA
David Montani, CTA, is National Head of Technical Tax – Private Enterprise at Grant Thornton. He has over 30 years’ experience, with over 20 of those in specialist tax advisory. In his role with GT, David delivers practical tax training, mentors staff, provides tax technical support on significant client engagements, and assists with quality and excellence protocols. - Current at 13 November 2025
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