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Advice and Transactional
Taxation issues frequently arise incidentally to other matters in which we have instructions.
Section 25A of the Income Assessment Act
Section 25A imposes income tax on any profit on land acquired by the landowner for the purpose of profit-making by sale, and also on any profit arising from the carrying on of any profit making scheme. If the landowner didn't buy the land for the purpose of profit-making by sale (e.g. the property was acquired for its long-term rent returning potential) then it becomes rather important to decide if the land is to be sold as a single lot or if it is to be subdivided by the landowner.
If the latter, a question will arise as to whether this is a profit-making scheme or, alternatively, simply the best realisation of a capital asset. The first alternative attracts income tax, the second does not.
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If it can be established that there will be no tax payable by the landowner, obviously the developer is in a position to negotiate a lower purchase price.
Businesses sold as a "going-concern"
- there must be supply to the recipient (the purchaser) of all things necessary for the continued operation of the enterprise; and
- the vendor must carry on the enterprise until the date of completion of the sale.
Many taxation related issues like the sale of a "going concern" arise time and time again in the course of a transactional legal practice, however other issues will arise only occasionally.
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