Hi, what are the tax implications, including fringe benefits, for building a permanent residence for the managers [employees] of a caravan park?
thansk
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Hi @SusieB85
The main tax implications of building a home in the caravan park will be CGT in the longer term and FBT in the shorter term.
You are providing the manager with a housing fringe benefit in the short term and ongoing. The taxable value of the fringe benefit depends on the type of accommodation provided.
If the manager lives rent-free in a house in the caravan park, the taxable value is the market rental value of that house. But if the accommodation is in a mobile home and the caravan park has other similar mobile homes that are let to customers, the taxable value is 75% of the market rental value of the mobile home.
In the future if you decide to sell the caravan park business you will have a CGT event and may need to pay capital gains tax. The construction and related costs of building the home in the park can be included in the cost base for the CGT calculations.
You can find more detail on our web site in section 10.5 here for the FBT considerations and general information about the CGT cost base for property here.
I hope that helps.
RichATO
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Hi @SusieB85
The main tax implications of building a home in the caravan park will be CGT in the longer term and FBT in the shorter term.
You are providing the manager with a housing fringe benefit in the short term and ongoing. The taxable value of the fringe benefit depends on the type of accommodation provided.
If the manager lives rent-free in a house in the caravan park, the taxable value is the market rental value of that house. But if the accommodation is in a mobile home and the caravan park has other similar mobile homes that are let to customers, the taxable value is 75% of the market rental value of the mobile home.
In the future if you decide to sell the caravan park business you will have a CGT event and may need to pay capital gains tax. The construction and related costs of building the home in the park can be included in the cost base for the CGT calculations.
You can find more detail on our web site in section 10.5 here for the FBT considerations and general information about the CGT cost base for property here.
I hope that helps.
RichATO
Thanks RichATO
Would the owners of the caravan park be entitled to claim GST on the cost of building the home?