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Edited version of your written advice
Authorisation Number: 1012888580716
Date of advice: 7 October 2015
Ruling
Subject: Capital gains tax - Subdivision of land/ trading stock
Question 1
Is the Land an asset held on revenue account since acquisition such that any gain on its disposal will be assessable as ordinary income?
Answer
No
Question 2
Will the proposed subdivision cause the Remaining Land to become trading stock in the trustee's hands under section 70-30 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
Question 3
If the answer to Question 2 is yes and the trustee elects under paragraph 70-30(1)(a) of the ITAA 1997 to be treated as having sold the subdivided land for its market value, will CGT event K4 occur under section 104-220 of the ITAA 1997?
Answer
Yes
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 70-10
Income Tax Assessment Act 1997 section 70-30
Income Tax Assessment Act 1997 section 104-220
Income Tax Assessment Act 1997 section 995-1
Reasons for decision
The private ruling was issued to the taxpayer based on the facts provided in the ruling application.