Private ruling: Disposal of trading stock
Date of advice: 1 April 2021
Published: June 2021
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can the trading stock be transferred from the partnership to each individual partner at tax value instead of market value using an election made under section 70-100 of the Income Tax Assessment Act 1997 ? | A1: Yes. An election can be made under subsection 70-100(4) of the ITAA 1997 as all the conditions of subsection 70-100(6) of the ITAA 1997 have been satisfied.

Relevant facts and circumstances: You have been conducting subdivision of land. The land became your trading stock in 20XX when development approval was obtained. Approximately X% of the land has been subdivided and sold by you. The remaining X% remains as trading stock to be subdivided and sold in future. You would like to subdivide and partition the remaining land into two lots so that each partner ends up with one lot in their own name. The partition would be done in such a way that the new land areas of each lot are the same and so are the values. Both individual partners will continue to carry on a business of subdivision with their respective lots. The transaction meets the conditions of paragraph 70-100(6)(b) and (c) of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 70-90 | Income Tax Assessment Act 1997 section 70-100