Special rules apply when a developer starts holding property they already own as trading stock or ceases to hold property they continue to own as trading stock.
If a taxpayer's asset (like land) was not initially considered trading stock but later becomes so as part of a property development business, certain actions are triggered:
Sale and Re-acquisition: The taxpayer is deemed to have sold the land to an arm's length party and re-acquired it at the same value.
Electing Cost or Market Value: Under Section 70-30, the taxpayer can choose to bring the land in as trading stock at either cost or market value.
Cost: The cost is determined based on what it would have been if the land were trading stock when acquired. If acquired for no consideration, cost is calculated differently.
Market Value: Market value considers the land's potential use, giving weight to its utility and the likelihood of obtaining approval for that use.
If you have any questions regarding these tax implications, feel free to reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment through our live calendar.