In 1968 Professor Stone listed as one of a number of “apparently meaningless categories” what he called “the distinction over an unusually penumbral area between capital and income”. That uncertainty continues and now affects property investors and developers both in an income tax/CGT context, and also in a GST context. This presentation examines the current issues affecting property investors and developers, with a view to providing some certainty and clarity in an increasingly difficult area. Issues covered include:
- distinguishing income from capital for small scale developments - a new take on an age-old theme
- how long does it take before a profit or gain is taxed on capital account?
- what is the number or scale of developments required before a gain is taxed as ordinary income?
- the practical implications of land becoming trading stock
- interaction issues between the income tax/CGT position and GST.