Tax-Free Land Sales: Federal Court Clarifies Capital Gains Treatment for Subdivided Farmland (May 25 Tax Update)

Relevant For:

Landowners considering subdivision and sale of pre-CGT land.

Key Points:

• Federal Court ruled in favour of a retired farmer who sold subdivided and claimed pre-CGT tax-free treatment.
• The land was held since before 1985 and used for farming until 2015.
• Development was managed by a third-party; the owner had minimal involvement.
• Court found no business or profit-making scheme; proceeds deemed capital in nature.
• Subdividing pre-CGT land doesn't alter its CGT status; each lot retains original status.
• Case underscores importance of intent and involvement in determining tax obligations.

Full Article:

In a landmark decision, the Federal Court has