TAXATION ON LAND TRANSACTIONS

 

 

There are four  categories of land transactions which may give rise to taxable income.  These are as follows:  

 

Cases where Gains from Land Transactions are Taxable:

 

Relevant Exemptions

 

 

 

Purpose or intention of Taxpayer

 

 

Land was acquired with purpose or intention of sale or other disposition.  There are no time limits. If at the ime the lad was purschased there exists a clear purpose of selling, the profit ultimately is taxable.

)

(a) business premises and land occupied by taxpayer is not excessive in area. This allows an exemption for land which is acquired and occupied by the taxpayer primarily and principally as premises from which substantial business is carried on by the taxpayer.  Premises used for storage , for example , are not premises from which substantial business is carried out, nor are premises from which rental income is derived

 

)

 

If the Occupation of the taxpayer or associated person when land was acquired is dealing in land (e.g. land dealer, land developer, builder, or an associated person) and the land was :

         Acquired for this purpose, or

         Disposed of within 10 years.  

If the land was acquired for the purpose of the business of dealing in land, the profits from its sale are taxable even if outside the 10 year period.

)

(b) dwellinghouse and land occupied by taxpayer and family usually not exceeding 4,500 square metres

 

 

Unless regular pattern of transactions

 

 

 

 

 

 

 

 

 

Change in Zoning

 

 

At least 20% of excess over cost is due to change of zoning or similar factors

(

Land acquired by taxpayer for farming or residence and purchaser has similar purpose, sale because of post acquisition factors

 

 

 

 

 

 

 

 

 

Subdivision or Development

 

 

Scheme commenced within 10 years of acquisition, unless work is of a minor nature.   The commencement date is deemed to be the first step which is taken of a reasonably definite nature and of a continuing series leading to the development of a subdivision e.g preparation of a plan,

/

Land occupied as residential land by taxpayer and family, limit 4500 sq metres

 

/

 

Scheme commenced at any time (in practice after 10 years since acquisition) where expenditure is significant e.g drainage, power and roading etc.

/

Land occupied or used by taxpayer for farming, and

Sold as economic unit/s, and

Purchased for purpose of farming



 

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