LAWCOMM | 403 | Tax Law | lecture notes | o the taxpayer or someone for

LAWCOMM 403 long notes.docx

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the taxpayer, or someone for the taxpayer, carries on development or division work; and

the development or division work involves signiﬁcant expenditure on channeling, contouring, drainage,

earthworks, kerbing, levelling, roading, or any other amenity, service, or work customarily undertaken or

provided in major projects involving the development of land for commercial, industrial, or residenal

purposes



Note the following:

there is no exclusion of capital receipts

the undertaking or scheme need not be “in the nature of a business.”

This secon applies only if the amount in queson is not taxable under secons CB 6 to CB 12 or CB 14

There is no upper me limit



The 10 year limit is not here, so what is the point of having secon CB 12 if you pay tax aﬅer 10 years

anyways?



There are two diﬀerences between the two:



Secon CB 13 only applies to major developments and secon CB 12 applies to any “not

minor” developments



Under secon CB 13, you can get deducons for the value of the land when you commence

the scheme whereas under secon CB 12, you get deducons for the value of the land when

you bought it



This deducon diﬀerence is important because land will usually increase in value over me –

so under secon CB 13 you essenally don’t pay tax on the capital gain accrued between the

me you bought the land and the me you commenced the scheme

If you are caught by this secon, you get to deduct the value of the land at the me you commenced the

undertaking or scheme (rather than what you paid when you bought it) (

secon DB 27

)



Since secon CB 13 applies only if the amount in queson is not taxable under secons CB 6 to CB 12

or CB 14, the deducon is based on the value of the land (rather than cost) only if the proceeds of sale

are taxable only under secon CB 13

There are exclusions for:



residenal land used by the taxpayer or her family: secon CB 17;



business premises: secon CB 20;



farm land: secon CB 21; and



investment land: secon CB 23.

CHANGES IN ZONING

TRANSACTIONS BETWEEN ASSOCIATED PERSONS



Secon CB 15 extends secons CB 6 to CB 14 to cover various transacons between associated persons.



Secons YB 1 to YB 20 deﬁne “associated person”.

EXCLUSIONS



Secons CB 16 to CB 23 provide for a series of exclusions. These exclusions apply where an amount derived from the

disposal of land would otherwise be taxable under secons CB 6 to CB 14.



The exclusions cover various circumstances such as where:

the taxpayer occupied the land “mainly as a residence” (but not if the taxpayer has engaged in “a regular

paern” of buying and selling land): secon CB 16;

the taxpayer occupied the land “mainly to carry on a substanal business” (but not if the taxpayer has engaged

in “a regular paern” of buying and selling land): secon CB 19;

the land is farm land capable of being worked as an economic unit: secon CB 21;

the taxpayer has subdivided the land for the purpose of holding it as an investment for rental income: secon

CB 23.

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