New Tax Changes for Build-to-Rent Developments

The government has officially passed new laws under the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 (“the Act”). One of the biggest changes affects Build-to-Rent (BTR) developments, with new tax incentives designed to boost investment in rental housing.

What’s Changing for Build-to-Rent?

If you’re involved in a BTR development, here’s what you need to know:

• Higher Tax Deductions for Construction Costs – Developers can now claim tax deductions on construction costs at a higher rate of 4% per year (up from 2.5%) for projects that started after 9 May 2023. This means they can recover their costs faster.
• Lower Tax on Rental Income for Investors – From 1 July 2024, the tax rate on rental income and capital gains from eligible managed investment trust (MIT) investments will drop from 30% to 15%. This makes BTR projects more attractive to investors.

Other Important Tax Updates

The Act also introduces changes beyond the BTR sector:

• Fairer Medicare Levy for Back Payments – People who receive large lump sum payments (like overdue wages) will now be assessed more fairly for the Medicare levy, preventing them from being pushed into a higher tax bracket unfairly.
• New Rules for Buy Now, Pay Later (BNPL) Services – The Act brings BNPL providers under the same rules as other credit providers, giving consumers stronger protections.
• Greater Tax Transparency for Large Companies – Big multinational businesses now have stricter reporting requirements to ensure they pay the right amount of tax in Australia.

What’s Still Under Review?

A proposed extension of the instant asset write-off for small businesses was removed before the Act became law. However, Parliament is still considering whether to bring it back.

What Does This Mean for You?

These changes could impact investors, developers, and everyday consumers. If you have questions about how these new laws affect your tax situation or business, Simmons Livingstone is here to help. 

Reach out to us at 1800 618 800 or via email admin@simmonslivingstone.com.au.