ATO confirms certain commercial properties can be subject to the new restrictions
The depreciation restrictions only apply in respect of residential premises that are used to provide residential accommodation. For these purposes, the term ‘residential premises’ is defined in S.995-1(1), by reference to the definition in S.195-1 of the GST Act, as follows:
“ residential premises means land or a building that:
- is occupied as a residence or for residential accommodation; or
- is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation;
(regardless of the term of the occupation or intended occupation) and includes a floating home.’’
The term ‘residential premises’ has already been the subject of considerable judicial scrutiny and interpretative guidance.
The ATO states (at paragraph 11 of LCR 2018/7) premises will be residential premises if they provide shelter and basic living facilities (i.e., the premises must be fit for human habitation) and are either:
- occupied by a person as a residence or for residential accommodation – which satisfies the first limb of the definition (i.e., paragraph (a) above); or
- intended to be occupied, and capable of being occupied, as a residence or for residential accommodation – which satisfies the second limb of the definition (i.e., paragraph (b) above). This limb is satisfied where premises are designed, built or modified, so as to be suitable to be occupied, and capable of being occupied, as a residence or for residential accommodation.
Premises that lack the features of shelter and basic living facilities are not residential premises. Refer to paragraph 9 of LCR 2018/7.