Tax issues when holding land as trading stock (1)

If someone holds land to sell it as part of a land business, it's considered trading stock. When they sell this land, it's handled differently for tax purposes.

Here's what happens:

1. The money made from selling the land is counted as regular income, not profit like in other schemes. But this income is only included when the sale is settled, not before.
2. Deductions for the cost of the land are delayed until it's sold. This helps match the timing of spending with income.
3. Some costs, like general business expenses, can be deducted right away under S.8-1.

So, when land held as trading stock is sold, the tax treatment is governed by Division 70, not the CGT or profit-making scheme rules.

If you need help understanding this, feel free to reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.