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EL 18: Modifications when entities transparent
or “Special tax rules for transparent entities with residential income”
You could also call this:

“How to determine the value of assets for tax purposes”

When you need to figure out the value of assets for certain purposes in the tax law, you need to follow these rules:

For land and improvements to land, you use a special method. You look at the most recent value set by your local council, or how much you paid for it when you bought it. If you bought it from someone connected to you, you use its market value instead. If you’re renting the land long-term, you can ask a qualified valuer to tell you what it’s worth, but this valuation can’t be more than 3 years old.

For property that has an ‘adjusted tax value’, which is a special tax term, you use that value.

For any other kind of property, you use its market value, which is what you could sell it for.

You use these rules at the end of each tax year when you’re working out if something is a ‘residential land-rich entity’. This is a special term in the tax law that you can look up in another part of the law if you need to.

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Next up: EL 20: Allocation of deductions related to bright-line disposals of residential land

or “How to claim expenses when you sell a house quickly”
Next

Part E Timing and quantifying rules
Allocation of deductions for excess residential land expenditure: Interposed entities

EL 19Valuation of assets

  1. For the purposes of section EL 17 and the definition of residential land-rich entity in section EL 3, an asset of a person or entity is valued at the end of an income year using,—

  2. for land, including an improvement to land, the amount set out in subsection (2):
    1. for property with an adjusted tax value, its adjusted tax value:
      1. for other property, its market value.

        1. For the purposes of subsection (1)(a), the value of land is the following amount, as applicable:

        2. the amount established by the later of—
          1. the land’s most recent capital value or annual value as set by a local authority; or
            1. either the cost of the land on acquisition or, if the transaction involves an associated person, its market value:
            2. for a leasehold estate in land, the market value of the land which the person may establish through a valuation made by a registered valuer no more than 3 years before the end of the income year.

              Notes
              • Section EL 19: inserted (with effect on 1 April 2019), on , by section 62(1) (and see section 62(2) and (3) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).