In April/May 2024 CEH made a submission to the Treasury’s consultation into the Treasury Laws Amendment Bill 2024: Build-To-Rent developments and Capital Works (Build-To-Rent Misuse Tax) Bill 2024, exposure draft. That submission is included herein. In response to this inquiry and the revised legislation introduced to Parliament in June 2024 we make some additional comments.
Key changes to the legislation since the circulation of the exposure drafts include:
- The reduction of the MIT withholding tax rate from 30% to 15% will now apply to capital gains derived from the disposal of eligible BTR dwellings and from capital gains derived from disposal of membership interests in BTR developments.
- Eligibility for the 15% withholding tax rate now extends past the 15-year BTR compliance period, however the misuse tax for non-compliance with eligibility criteria is only applicable to the first 15-year period.
- Dwellings will be considered affordable if the rent payable is 74.9% of the comparable market value of the rent otherwise payable on the “open market”. The Treasury’s exposure draft’s explanatory memorandum states that affordable dwellings would be determined based upon “comparable market rents”.1
- The new legislation does not require affordable dwellings within BTR developments to contain the same “amenities” as comparable non-affordable dwellings. To be eligible for concessions, a development’s comparable non-affordable dwellings (determined based upon floor area and number of bedrooms) must be greater or equal to the number of comparable affordable dwellings.
