Tax Traps and Hazards in Property Development – a recorded lunchtime online conference

Hear from the experts at this online conference. You can watch it on your computer or on your portable electronic device from anywhere.

The conference will be based on our highly successful video webinar technology: there'll be a chairperson and presentations.

THE PROGRAM

Session 1: How to Determine the Tax Treatment on a Property Sale

Being asked how a property sale is taxed can be one of those quick tax questions that can require significant time and research to not necessarily come up with a definitive answer. This session looks into the tax treatment of various types of property sales to assist you in answering that next property sale question, including:

• What are the three income tax scenarios that can apply to a land subdivision?
• Can a change of intention from main residence use to subdividing the land for sale, change the tax status from capital to revenue?
• If a profit making intention is determined for the subdivision of land a main residence is located on, how is the profit calculated?
• What factors contribute to going beyond merely realising the asset (capital) to being on revenue account?
• When undertaking a subdivision, what type of activity has a bearing on the capital/revenue distinction? ie.:

• Is the extent of engaging a developer and other professionals relevant?
• Obtaining building plans and permits for the sale of subdivided rear yard of a main residence to fetch a higher price?
• Progressively subdividing and selling off farmland

• Are there any tax issues to consider for a builder who constructs a main residence then resides in it for a year or so before selling?
• Practical examples

Session 2: Is Your Property Venture an Enterprise?

The ATO has indicated that whilst considerable thought may be given as to whether a property venture is on income or capital account, less thought is given as to whether an enterprise is being conducted to tick off the GST aspects of the arrangement. This session looks into when GST can apply to a property development, including:

• Is an enterprise different to a business?
• What are the factors that determine whether it is a business or profit-making undertaking being conducted?
• Does determining whether an enterprise is being conducted for GST follow the same capital v revenue distinction for income tax?
• GST issues to consider for:

• the subdivided backyard
• subdivided farmland (San Remo Heights Pty Ltd v C of T [2020] AATA 4023)

• Can the definition of an “enterprise” differ for SMSFs? (Sec. 9.20(1)(da) GST Act 1999, Collins Anor ATF The Collins Retirement Fund v FC of T [2022] AATA 628)
• The ATO’s data matching of property sales and review activity being undertaken
• Practical examples

Session 3: Is Your Property Project Structure Sound?

When deciding from the outset the structure that a property will be housed in, consideration needs to be given to a number of factors which can include the intention for the property, the profile of the parties involved and the tax attributes of the various structures. This session reviews the various options and issues to consider for each, including:

• Structures to consider if the project is being undertaken with a third party (or a number of parties)
• Partnership or joint venture – what are the tax differences?
• Which structures suit:

• development and sale
• property which may incur tax losses prior to a subsequent sale
• long term investment, which may include an accumulation of carried forward tax losses

• The use of unit trusts to hold property, including:

• the tax aspects of funding by loans or capitalizing units (IT 2684)
• CGT event E4 and capital works deduction implications

• Structuring loans when using a discretionary trust to hold property (TD 2018/9)
• Land banking and the limit on deductions for vacant land:

• What land is affected by these rules?
• Which entities are affected by these rules?

• Case studies