TAXATION ON LAND TRANSACTIONS
T
here 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: |
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Relevant
Exemptions |
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Purpose
or intention of Taxpayer |
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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 |
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) |
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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 |
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Change
in Zoning |
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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 |
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Subdivision
or Development |
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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 |
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/ |
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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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