The ATO listed important things to think about when deciding if a property deal is a regular business transaction or just a one-time thing. Here are some examples:
- Why the person bought the land and why they're selling it. For instance, if they got the land from their family and then sold it after dividing it, it's less likely to be seen as a business deal compared to if they bought it specifically to sell it later.
- How much money is involved and how big the profit they're aiming for is.
- The size and type of the deal and what else the person does with their property. If they're already in the business of developing properties, that makes it more likely this deal is a business one too.
- How much the person is personally involved in the deal.
The ATO also warns that certain property deals are usually seen as part of a plan to make money rather than just selling a regular asset. These include:
- Buying land to build houses or units and then selling them.
- Splitting a backyard and building something on it to sell.
So, if someone tries to argue that selling these kinds of properties should be seen as just selling a regular asset, it's usually not going to work because the ATO sees them as part of a profit-making plan.
If you need help, contact Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.