14 July 2017
Media Release - #2017061, 2017

Better targeting housing tax deductions: exposure draft legislation

The Turnbull Government has today released exposure draft legislation and explanatory material for the housing affordability and tax integrity measures the Government announced in the 2017-18 Budget.

There are concerns around the abuse of deductions for travel expenses that do not represent a legitimate commercial need. Travel deductions for individual investors with residential investment properties, including travel costs associated with inspecting and maintaining properties, will no longer be deductible. This change will not prevent investors from claiming a deduction for the expense of engaging third parties such as real estate agents to provide property management services for investment properties.

The tax system currently creates opportunities for plant and equipment to be depreciated by multiple owners of a property in excess of its actual value. Significant abuse of the tax system has been witnessed in relation to property investors and advisers claiming excess deductions. This change will improve the integrity of the tax system by limiting plant and equipment depreciation deductions to outlays actually incurred by individual investors in residential real estate properties.

Together, these changes will improve the integrity of the tax system by better targeting tax deductions for residential investment properties.

The Government recognises the housing affordability challenges facing Australians, particularly for young people and families. These changes are part of the Government’s comprehensive plan to address housing affordability. This plan also includes assistance for first home buyers, new measures to increase the supply of affordable housing and the reform of housing-related payments to the States and Territories.

The Exposure Draft Bill and Explanatory Memorandum are available on the Treasury website.

Submissions will close on Thursday, 10 August 2017.