BALDWINS • FoodLegal

Australian Lawyers and Consultants

One-Off Property Subdivision

September 2001

The tax position of a person who subdivides a long-term real estate asset (e.g. part of the family farm) can vary according to the individual’s factual circumstances. Yet, the Tax Office tries to suggest that an adverse income tax assessment will be raised even against a person who subdivides and sells part of his or her land in the process of a one-off isolated realisation (refer to examples of the ATO’s viewpoint in Tax Determinations TD 92/126, TD 92/127, TD 92/128 and TD 92/161). Even though some cases have supported the Tax Commissioner e.g. Stevenson’s case (1991) and Abeles’ case (1991), there are numerous cases that have favoured the taxpayer e.g. Statham (1989), Casimaty (1997), McCorkell (1998), and Ashgrove (1994) to name a few.

The difference tax-wise can be significant because being assessed for capital gains tax may allow a halving of the income tax rate, while for a pre-CGT asset, the difference may be between not having to pay any tax at all or paying tax at the top marginal rate (48.5%).

For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.

Return to the Corporations Law Archive or Australian Tax Law Archive.