How the Byrz calculation engine works

Byrz models the Australian property-tax outcome for a single asset under current law (today's ITAA 1997 + ATO interpretation) and under the proposed 2027 reform (Federal Budget measures, labelled proposed until enacted). This page documents the statutes and formulas the engine implements, with section references.

Inputs the engine takes

Property: purchase price, current value, contract and settlement dates, expected sale date, established residential / new-build flag, main-residence history, optional construction date and cost.
Loan: amount, interest rate, type (P&I or interest-only), term, interest-only period.
Forecast: annual income, expenses, growth, vacancy, CPI rate, years to forecast.
Tax profile: per-owner taxable income, Medicare levy + MLS flags, filing status (single / family), dependant count, residency status, capital losses available.
Structure: ownership split, six structure types modelled (personal, joint personal, discretionary trust, company, SMSF accumulation, SMSF pension).

CGT - current law vs proposed reform

Current law

CGT event A1 (s 104-10 ITAA 1997) on disposal. Acquisition date is the contract date (s 109-5).
Cost base per s 110-25 ITAA 1997: purchase price + acquisition costs + capital improvements + selling costs, less capital works claimed (s 110-45(2)).
50% individual discount on a discount capital gain per s 115-100(a) ITAA 1997. Eligibility requires the asset held at least 12 months (s 115-25). Discount apportioned for non-resident periods (s 115-115).
Trust streaming per Subdiv 115-C - gains flow through retaining their CGT character.
SMSF discount - long-term gains discounted by 1/3 (s 115-100), effective rate 10% in accumulation phase.

Proposed reform (from 1 July 2027)

Indexed cost base for the post-2027 portion of the gain - CPI uplift applied year-by-year from 1 July 2027 to sale.
Two-period split: pre-2027 gain calculated under current law (50% discount); post-2027 gain calculated under reform (indexation, no discount on the indexed real portion).
New-build election - elect the more favourable of old method vs reform method for new builds.
30% minimum tax floor on the sale-year capital gain under the trust path (proposed Subdiv 115-D floor - engine applies a minimum effective rate when the floor exceeds beneficiary marginal tax).

Negative gearing

Current law - full deductibility against other income for residential and commercial property losses, subject to s 8-1 (deductibility) and the general loss rules.
Proposed reform - established residential losses can no longer offset other income; carried forward until offset by future property income (or eligibility changes at sale). New builds + commercial unaffected. Engine implements per s 26-105 (proposed).

Trust streaming and the minimum tax floor

Beneficiary income calculated per s 97 ITAA 1936 - present entitlement triggers assessable inclusion in the beneficiary, taxed at marginal rates.
From 2028-29 (proposed), a minimum tax floor on trust capital gains applies to discretionary trusts outside the restructure-relief window (1 Jul 2027 – 30 Jun 2030). Engine applies the floor at the trust-group level after beneficiary tax is computed.
Schedule 2F (loss recoupment) gating implemented for trust losses - losses denied until the relevant tests pass.

SMSF + Division 296

Accumulation earnings taxed at 15% (s 295-5 ITAA 1997 + Reg 295-10); long-term gains 10% effective via 1/3 discount.
Pension earnings 0% within transfer balance cap (s 295-385).
Division 296 (proposed) - additional 15% on the portion of earnings attributable to total super balance above $3M, calculated on the proportional share. Engine applies as a top-up on the SMSF tax line at sale year.
LRBA under s 67A SISA - limited recourse borrowing modelled where the user has selected SMSF and non-zero loan amount.

Land tax - per-state schedules

Each state revenue office assesses land tax on the unimproved land value of all assessable holdings in that state. The engine implements the 2024-25 schedules for NSW, VIC, QLD, ACT, WA, SA, TAS, with progressive brackets, foreign-owner surcharges, and the discretionary-trust surcharge where applicable. Portfolio aggregation (s 27 Land Tax Management Act 1956 NSW, equivalents in other states) computes the marginal land tax this property adds when the user already holds other assessable land in the same state.

Depreciation - Div 43 + Div 40

Div 43 capital works per s 43-70 ITAA 1997 - historical construction cost × rate (2.5% for residential post-1987, 4% for industrial / earlier residential bands). Eligibility starts 18 Jul 1985 residential, 20 Jul 1982 industrial (s 43-15). Engine caps by remaining effective life from settlement.
Div 40 plant & equipment - per-item prime cost (s 40-75) or diminishing value (s 40-72) over each item's effective life. s 40-27 disallows Div 40 on previously-used residential plant for established residential acquired after 9 May 2017.
When historical construction cost is not supplied but construction date is, the engine scales today's purchase back to a proxy build cost using the ABS Producer Price Index - Building Construction (long-run ~4% CAGR) rather than a flat fudge factor.

Main residence treatment

s 118-110 - full exemption while the property is your main residence.
s 118-145 - 6-year absence rule, applied when the user opts in.
s 118-185 - partial exemption using the days method when the property is income-producing for part of the hold.
s 118-192 - cost base reset to market value at the date first used to produce income.

Verification

The calculation engine carries an internal forensic test suite. Every formula above has at least one validation case that asserts the computed result against a hand-derived figure with statute citation. The suite has been audited round-by- round (R1 through R8 as of writing) - each round runs an adversarial harness covering boundary cases, zero / negative / threshold-edge inputs, and cross-feature interactions.

Source code for the engine is in our repository. Test cases are in shared/calc-engine/validation-tests.ts and the round-by-round harnesses in audit/.