Advise Suzette of the Income tax Implications of the Below Transactions


SKU: Fin060909 Category:
  • Where income is derived from property
  • Where income is derived from personal exertion
  • Where income is derived from business


Australian tax

On 1 July 2010, Suzette sold the farm she had purchased 25 years earlier and moved to the north coast of New South Wales where she rented a house, intending to retire. She also purchased a hectare of land on the waterfront. She soon became bored with nothing much to do in retirement. In order to more fully provide funds for her retirement and by way of investment, Suzette had much consultation with, and subsequently commissioned a builder in October 2012 to design and build eight townhouses on the land she owned on the waterfront. Suzette also consulted her accountant at this time and asked him to provide details of the expected rental return from the lease of seven of the units, as she intended to live in one of them.


The units were completed in May 2013. Suzette was successful in leasing five of the units on a short-term basis. In October 2013 she successfully applied to have each of the units changed to ‘strata titles’ and by the end of December 2013, four of the units had been sold. With the proceeds, Suzette purchased an adjoining block of land, with the intention of building more units.



Advise Suzette of the income tax implications of the above transactions (ignore any Capital Gains Tax implications).


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