Some people disagree about whether a taxpayer can give up on a plan to make money. They point to statements from previous court cases like Westfield v FCT and Myer's case. These statements suggest that if a transaction is not part of the usual business and the profit wasn't made in the intended way, then it might not be considered taxable income.
Based on these statements, it could be argued that if someone makes a profit from selling property in a way different from their original plan, they've basically given up on the initial money-making idea. So, they might be able to say the transaction is not about making money, especially if they don't start another money-making plan with the property.
However, the ATO's view, following Moana Sand's case, is not as clear-cut. They acknowledge that this issue needs more clarification.
Interestingly, the rules for trading stock provide a way for a business to change how it sees an asset, like land, from being part of the regular stock to being seen as a capital asset. This suggests that the ATO might be more open to the idea that a taxpayer can change their mind about how they treat an asset.
If you have any questions, feel free to contact Tax Ideas Accountants & Advisers at
+61 2 83181545 or book an appointment using our live calendar.
