Private ruling: Effect of death and land development
Date of advice: 21 March 2024
Published: 29 April 2024
Ruling period: 1 July XXXX to 30 June XXXX

Ruling: Q1:  | A2:  | Q2: Will the disposal of the X lots by the Executor (the sale of X lots to the Developer and the distribution of X lots to the Beneficiaries), be taxable supplies pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A3: No. | Q3: Will the capital gain on the distribution of the X lots to the Beneficiaries be disregarded pursuant to Division 128 of the ITAA 1997? | A4: Yes. | Q4: Will the Commissioner exercise the discretion under section 99A of the Income Tax Assessment Act 1936 (ITAA 1936)to assess the income of the trust estate under section 99 of the ITAA 1936? | A5: Yes.

Relevant facts and circumstances: The Family The late Individual A (Individual A) passed away on XXXX. The late Individual B (Individual B) passed away on XXXX. The terms of Individual B's Will are as follows: I GIVE DEVISE and BEQUEATH unto [Individual A] the whole of my Estate or if [they] predeceases me, or does not survive me by 28 days, I leave my Estate equally between my children who survive and attain the age of 21 years. There are 3 equal beneficiaries (collectively described as Beneficiaries) of Individual B's estate (Estate): Individual E attained 21 years of age and survived Individual B. Individual E's share of the Estate forms part of their own estate. Individual C was appointed executor of the Estate (Individual C is also referred to as Executor where relevant). The Land Individuals A and B acquired Land in prior to 20 September 1985 as joint tenants. The Land was purchased as a hobby farm for the Family. A residence was built on the Land in the XXXX. In the last 3 years of Individual B's life, from Individual A's death, it was their primary residence. No business or enterprise has been conducted on the Land. The Land was valued at $X in XXXX. The current market value of the Land is $X. Development of the Land The Developer approached the Executor regarding the development of the Land in XXXX as the Developer undertakes developments in this region and was familiar with the property and it's potential for subdivision. No member of the Family has been approached by developers in the past. Nor did any member of the Family approach any developers. No effort was made by any member of the Family to rezone the Land since its acquisition. The Land is currently zoned rural-residential as part of the Town Planning Scheme. In XXXX, the Executor, decided to engage the Developer to provide various services (detailed below) in relation to the development of the Land. On XXXX, the Executor entered into a Management Agreement and Sale of Land Agreement with the Manager appointed by the Developer (also referred to as the Developer for convenience). The existing residence will remain on the part of the Land that will be retained and eventually distributed to the Beneficiaries. Management Agreement Under the Management Agreement, the Developer is appointed to undertake the subdivision of the Land into rural residential lots in accordance with any Planning Commission (PC) approval, up to and including the issue of certificates of title for each of the subdivided lots (Development). The Executor agrees to make the Land available for the Developer to develop the Land and grants development rights to the Developer to undertake the proposed residential development of the Land in accordance with the relevant approvals and the terms of the Management Agreement. The Beneficiaries have consented to the terms of the Management Agreement (which encompasses the Sale of Land Agreement): Beneficiaries Consent By their execution of this Agreement each of the beneficiaries of the Estate of Individual B: a) confirm their consent to this Agreement and covenant that they will, should the Land be transferred to them during the term of this agreement, execute a further copy of this Agreement naming each of the Beneficiaries as a Principal but otherwise in the same form as this Agreement; and b) together with the Principal agree that transfer of the Land to the beneficiaries will not be deemed to trigger clause X of this Agreement. Relevantly, Clause X of the Management Agreement allows the Developer to terminate the agreement where the Executor ceases to be the beneficial owner of the Land. Conditions precedent under the Management Agreement Under the Management Agreement, the Executor and the Developer acknowledge and agree that if the PC approval is not obtained within 12 months of the date of the Agreement then either party may terminate the agreement by written notice effective immediately. Key terms of the Management Agreement The key terms of the Management Agreement are as follows: o obtaining PC Approval; o obtaining all statutory and other approvals for the Development including those under the WAPC Approval and negotiations with the statutory or other authorities concerned with such Development; o instructing consultants as necessary and supervising the work to be carried out by them; o arranging and calling tenders and negotiating terms of contracts for Development work; o programming, co-ordinating and supervising the progress of Development contracts; o arranging for the preparation of plans of subdivision and applications for the issue of certificates of title for the lots contained in the subdivision; and o arranging for the installation of all relevant services, including but not limited to water, drainage, telecommunication infrastructure and connections, electricity, and other services as required by the PC Approval or Local Government Authority, to each lot resulting from the Development, so that each lot will be ready for sale as a fully serviced residential lot by the completion of the Development; o finishing all lots to the specified standard o review and verify the maintenance at all times of satisfactory and adequate insurances for all risks affecting the Land and the Development and liabilities relating to such matters, and provide a copy of such insurances to the Executor upon request; and o serve on the Executor true copies of all notices relating to the Land received by or coming to the knowledge of the Developer. o to grant the Developer and its officers, employees, contractors and agents the right to access, use and control the Land for the purposes of completing the Development and performing the Management Services for the period of the Developer's appointment under the agreement; o to provide the Developer with all powers and authorities from the Executor which may be necessary to enable the Developer to perform the Management Services, and to ratify the actions of the Developer performed on the Executor's behalf in good faith; and o to execute any act or document the Developer may request to enable it to implement the Development. Scope of Development It is expected the Land will be subdivided into X lots - X will be sold to the Developer (Disposal) and X will be distributed to the Beneficiaries in accordance with the terms of Individual B's Will and the Beneficiaries' consent to the Development (Distribution). The subdivision of the Land will only be to the standard required by council. The estimated market value of each subdivided lot is approximately $X. A reasonable estimate for the project timeline would be somewhere between 18 months to 24 months to complete (from the commencement of work to subdivide the Land). Payment under the Management Agreement The Developer's fee for its Management Services is $X (inclusive of GST). The parties have agreed that the Developer is entitled to set-off the Management Fee against the purchase price payable by the Developer as buyer under the Sale of Land Agreement. Under the Agreement, the Executor provides the Land and the Developer provides the development services. The fee for the development services for the X lots that the Executor and Beneficiaries retain is the value of the other lots of vacant land. That is, the market value of the X lots to be sold to the Developer is the unimproved/undeveloped land only value of $X (i.e. they are unrelated entities dealing on arm's length terms having regard to their competing interests). Sale of Land Agreement Relevantly, the Sale of Land Agreement provides: Property is that part of the Parent Lot which does not form part of the Seller's (i.e. the Executor's) Retained Land, and is not ceded, transferred, taken or resumed by an Authority in the course of or as consideration for the Development. The Executor's Retained Land is X Proposed Lot(s) in the Development, being Lots X, X, X, X, X and 1X on the Lot Plan (being the proposed subdivision of the Land into lots), with each lot being a minimum of approximately 20,000m 2 , situate in the approximate configuration and sizes (plus or minus 5%) set out in the Lot Plan, and subject always to amendment in accordance with clause X (which sets the manner in which the Lot Plan may be varied). The Purchase Price is $X exclusive of GST. The Developer acknowledges that the Property is purchased on an "as is, where is" basis. The Sale of Land Agreement is subject to and conditional upon the satisfaction of the Conditions Precedent, being: Settlement is to be within 30 days of the date on which the last of the certificates of title for the proposed lots are issued. The Beneficiaries have consented to the Sale of Land Agreement: Beneficiaries Consent By their execution of this Agreement each of the beneficiaries of the Estate of Individual B confirm their consent to this Agreement and covenant that they will, should the Land be transferred to them during the term of this agreement, execute a further copy of this Agreement naming each of the Beneficiaries as a Seller but otherwise in the same form as this Agreement. Other matter s The Executor and/or Beneficiaries have not undertaken property development activities in the past - they have no history of involvement in property development, building etc. which would indicate a business is being carried on. Individual C subdivided their main residence around XXXX, which involved a strata subdivision to the side of the existing home to create one vacant lot onto which they built and moved into their current main residence. They sold their previous main residence. There are no immediate plans by the Beneficiaries to market and sell their lots. They are considering building on the land they inherit. Individual C intends to hold his lots for the long term. The Beneficiaries have explained that they hold an emotional connection to the Land. For each of the Beneficiaries to hold onto some of the land, is holding onto their legacy. The Developer is not a party that is related to the Executor or the Beneficiaries. The Estate has not been fully administered. Probate was granted in October XXXX. The delay is due to the Family coping with the loss of Individual B and then Individual E within a relatively short period of time, and then dealing with the impact of COVID-19 on the administration of the estate (including the sale of the shop/caravan park and the development of the Land). The assets of the Estate comprise: The Estate is not registered for GST.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 112-10 | Income Tax Assessment Act 1997 Division 128 | Income Tax Assessment Act 1997 section 128-15 | Income Tax Assessment Act 1997 section 128-20 | Income Tax Assessment Act 1936 section 99A | A New Tax System (Goods and Services Tax) Act 1999 section 9-5

Reasons for decision: Summary: Answer: yes. Answer : the subsequent disposals lots by the Beneficiaries may be subject only to the CGT provisions where there have been no changes to the lots from the time of inheritance to disposal. | Detailed Reasoning - Summary Issue 1: The Commissioner considers that, on balance, the Executor and/or Beneficiaries would not be undertaking a business operation or commercial transaction when developing the Land. To realise the best possible return for the Land, as the Executor or Beneficiaries have no experience in property development (noting Individual C's minimal experience with the subdivision of their main residence), the Executor, with the consent of the Beneficiaries, will engage experts to undertake the subdivision of the Land. It is considered the proposed size and scale of the activity does not reflect a business of land development. The Disposal and Distribution with respect to the X lots would be a 'mere realisation' of a capital asset that is subject to capital gains tax only. The subsequent disposal of their X lots by the Beneficiaries may be a 'mere realisation' of a capital asset where there have been no changes to the lots form the time of inheritance and disposal. that is subject to capital gains tax only. Upon the completion of the development execution of the Sale of Land Agreement CGT event A1 happens in relation to each of the X lots sold to the Developer. In relation to each of the X lots distributed to the Beneficiaries, the assets pass to the Beneficiaries pursuant to section 128-20 of the ITAA 1997, and they are taken to have acquired them on the date of Mary's death. Where a Beneficiary subsequently disposes of their inherited lot, e.g. by execution of a sale contract, CGT event A1 may happen in relation to that lot (whether it remains a mere realisation of an asset will depend on the qualification that the lot has not changed from the time of inheritance to disposal). | Detailed Reasoning - Income tax treatment of the sale of land: Broadly, profits from a land sub-division can be treated for taxation purposes in the following manner: a) As ordinary income under section 6-5 of the ITAA 1997, on revenue account, as a result of carrying on a business of property development, involving the sale of land as trading stock. b) As ordinary income under section 6-5 of the ITAA 1997, on revenue account, as a result of an isolated commercial transaction entered into by a non-business taxpayer or outside the ordinary course of business of a taxpayer carrying on a business, which is the commercial exploitation of an asset acquired for a profit-making purpose. c) As statutory income under the capital gains tax (CGT) regime (sections 10-5 and 102-5 of the ITAA 1997) on the basis that a mere realisation of a capital asset has occurred. d) As statutory income under section 15-15 of the ITAA 1997, where pre-CGT land is ventured into a profit-making scheme. | Detailed Reasoning - Land sold as part of carrying on a business of property development: Whether the sale of land is a disposal in the course of carrying on a business is determined by examining and weighing all the relevant facts and circumstances taken as a whole. The principles in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11) provide guidance on whether a taxpayer is carrying on a business and can be applied in various contexts. Specifically, paragraph 13 of TR 97/11 provides a list of indicators that are relevant in determining whether a taxpayer is carrying on a business. In general, the indicators are: Relevantly, activities etc. do not need to be conducted by the taxpayer for the taxpayer to be considered to be carrying on a business - it can be by the taxpayer, on behalf of the taxpayer or in conjunction with others: see for example, Hance & Anor v Federal Commissioner of Taxation 2008 ATC 20-085 where the court confirmed that businesses can take many forms, and can include a silent partner who delegates all responsibility for the business to another individual and consequently individual investors would be considered to be carrying on a business. In determining whether a taxpayer is carrying on a business, no one indicator will be decisive. The indicators must be considered in combination and as a whole. Whether a business is being carried on depends on the 'large or general impressions gained' from looking at all the indicators and whether these indicators provide the operations with a commercial flavour. Land is sold as part of an isolated transaction entered into by a non-business taxpayer, or outside the ordinary course of business of a taxpayer carrying on a business for the purpose of making a profit Profits arising from an isolated transaction as a result of entering into a profitmaking undertaking or scheme will be ordinary income under section 6-5 of the ITAA 1997, on revenue account ( FC of T v. Myer Emporium Ltd 1987 163 CLR 199; 87 ATC 4363; 18 ATR 693 ( Myer Emporium ) Taxation Ruling TR 92/3 - Income tax: whether profits on isolated transactions (TR 92/3) discusses the application of the principles outlined in the Myer Emporium case and provides guidance in determining whether profits from isolated transactions are ordinary income and therefore assessable under section 6-5 of the ITAA 1997. It refers to isolated transactions' as: TR 92/3 also provides that profits from an isolated transaction will be income when: For an isolated transaction to be considered to be of a business or commercial nature, it is usually necessary that a taxpayer has the purpose of profit-making at the time of acquiring the property. In Myer Emporium , the Full High Court said the following about the nature of profits from isolated transactions and the purpose of profit-making at the time of acquisition: It is one thing if the decision to sell an asset is taken after its acquisition, there having been no intention or purpose at the time of acquisition of acquiring for the purpose of profit-making by sale. Then, if the asset be not a revenue asset on other grounds, the profit made is capital because it proceeds from a mere realisation. But it is quite another thing if the decision to sell is taken by way of implementation of an intention or purpose, existing at the time of acquisition, of profit-making by sale, at least in the context of carrying on a business or carrying out a business operation or commercial transaction. In general, whether a profit from an isolated transaction is income according to ordinary concepts depends very much on the individual circumstances of the case. Matters listed in TR 92/3, which are relevant in considering whether an isolated transaction amounts to a business operation or commercial transaction include: In determining whether activities relating to isolated transactions result from a profit-making undertaking or are the realisation of a capital asset, it is necessary to examine the facts and circumstances of each particular case. This may require a consideration of the factors outlined above; however there may also be other relevant factors that need to be weighed up as part of the process of reaching an overall conclusion. No single factor will be determinative; rather it will be a combination of factors that will lead to a conclusion as to the character of the activities. | Detailed Reasoning - Land is sold as part of a profit-making undertaking or scheme: Where pre-CGT land has been ventured into a profit-making undertaking or scheme that is more than a mere realisation of the asset but less than carrying on a business or an isolated business or commercial transaction with a profit making purpose with - the land is treated as a revenue asset and the profit from the disposal of land is statutory income under section 15-15 of the ITAA 1997 and the loss is deductible under section 25-40 of the ITAA 1997. Section 15-15 of the ITAA 1997 cannot apply if the profit is ordinary income under section 6-5 of the ITAA income or the property was acquired on or after 20 September 1985. | Detailed Reasoning - Mere Realisation: The expression 'mere realisation' is used to distinguish a mere realisation from a business operation or a commercial transaction carrying out a profit- making scheme, where the sale of the CGT is on capital account to which the CGT rules will generally apply. These proceeds are not ordinary income. Profits made on the realisation of capital assets can still be ordinary income if the activities go beyond a mere realisation and instead become a separate business operation or commercial transaction even though the taxpayer did not have a purpose of profit-making at the time of acquiring the asset. In McClelland v FC of T [1970] HCA 39, for example, the Privy Council held that the question to be answered was whether the facts revealed a mere realisation of capital, albeit in an enterprising way, or whether they justify a finding that the taxpayer went beyond this and engaged in a trade of dealing in the asset, albeit on one occasion only. Lord Justice Clark, in distinguishing between proceeds that are mere realisation of capital and ordinary income, stated in California Copper Syndicate v Harris (1904) 5 TC 159 at pp 165-166 that: ...What is the line which separates the two classes of cases may be difficult to define, and each case must be considered according to its facts; the question to be determined being - is the sum of the gain that has been made a mere enhancement of value by realising a security, or is it a gain made in an operation of business in carrying out of a scheme of profit-making? In FC of T v Whitfords Beach Pty Ltd 82 ATC 4031, Gibbs CJ similarly said (at 4034), that: When the owner of an investment chooses to realize it, and obtains a greater price for it than he paid to acquire it, the enhanced price will not be income within ordinary usages and concepts, unless, to use the words of the Lord Justice Clerk in California Copper...'what is done is not merely a realisation or change of investment, but an act done in what is truly the carrying on, or carrying out, of a business'. Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number (MT 2006/1) explains the circumstances in which transactions involving the subdivision and sale of land, are considered to be a profit-making undertaking or scheme, as opposed to the mere realisation of a capital asset (as discussed below under Issue 2). | Detailed Reasoning - CGT Event A1: Where the subdivision of land and the sale of the subdivided lots/new parcels of land would be the mere realisation of an asset: it is the disposal of a CGT asset that is subject to capital gains tax. Relevantly, under subsection 104-10(1) of the ITAA 1997, CGT event A1 happens if you dispose of a CGT asset. Under subsection 104-10(2) of the ITAA 1997, you dispose of a CGT asset when a change of ownership occurs from you to another entity. The effect of CGT Event A1 happening is that you make a capital gain if the capital proceeds from the disposal are more than the asset's costs base, or a capital loss if those capital proceeds are less than the asset's reduced cost base (subsection 104-10(5) of the ITAA 1997). The time of the event is when you enter into the contract for the disposal, or, if there is no contract, when the change occurs (subsection 104-10(3) of the ITAA 1997). The time when a contract is entered into is the time when it comes into existence for general law purposes. If a contract is subject to a condition, an issue arises whether the condition is a condition precedent to its formation or whether it is a condition precedent to performance of the contract. In the first case, the contract does not come into existence until the condition is met. In the second case, the condition does not prevent the creation of the contract - non-fulfilment of the condition merely entitles a party to terminate the contract: see Perri v. Coolangatta Investments Pty Ltd (1982) 149 CLR 537. (See, for example, ATO ID 2004/668 Income tax Capital gains tax: buy-sell agreement - time of CGT event A1 ). | Detailed Reasoning - Accounting for the capital gain: In Taxation Determination TD 94/89 Income tax: capital gains: in what year of income is a taxpayer required for tax purposes to include a capital gain or loss in relation to land disposed of under a contract which is made in one year of income, but which is settled in a later year of income? (TD 94/89) the Commissioner sets out the following approach for the recognition of a capital gain from the disposal of property: 1. Where the contract is settled in a later year of income, a taxpayer is required to include a capital gain or loss in the year of income in which the contract is made, not in the year of income in which the contract is settled. 2. Where land is disposed of under a contract, subsection 160U(3) of the Income Tax Assessment Act 1936 deems the disposal to have taken place when the contract is made (see Note (1)). 3. However, a taxpayer is not required to include any capital gain or loss in the appropriate year until an actual change of ownership occurs. Settlement effects a change of ownership and a disposal (subsection 160M(1)) which then triggers the operation of subsection 160U(3). When settlement occurs, the taxpayer is then required to include any capital gain or loss in the year of income in which the contract was made (subsection 160U(3)). If an assessment has already been made for that year of income, the taxpayer may need to have that assessment amended. ... 5. Where an assessment is amended to include a net capital gain, and a liability for interest arises under subsection 170AA(1), the remission of interest will be dealt with in each case on its own merits. We would expect, however, that the discretion in subsection 170AA(11) would ordinarily be exercised to remit the interest in full where requests for amendment are lodged, and where relevant, self-amendments are made, within a reasonable time after the date of settlement. In most cases, we would consider a period of one month after settlement to be a reasonable period. | Detailed Reasoning - Application in these circumstances: The Commissioner considers that, on balance, having regard to the factors set out below, the Executor and Beneficiaries would not be undertaking a business operation or commercial transaction when developing the Land. The property was originally acquired by Individuals A and B with the intention to use it as a family retreat and for a hobby farm. The property was used for those purposes until Individual B's death in XXXX. Individuals A and B were not required to obtain an ABN or register for GST in relation to their hobby farming activities and the property was not bought for resale at a profit. Following Individual B's death, the Executor was approached by the Developer in XXXX. Prior to this, there had been no attempts by the Family to seek rezoning and/or development approval with respect to the Land. The Executor and Beneficiaries considered that the property value was less than what may be achievable by proceeding with the development agreement. In this case, the Executor and Beneficiaries have minimal involvement in the subdivision of the land and has not contributed any funds, expertise or been involved in the development plans or applications. Their role is passive and subdivision activities were initiated by the Developer who is conducting the development activities and providing the funding. The Management Agreement provides that the Developer shall have the responsibility and right to do all of the things which are necessary or desirable to complete the development. The Executor's responsibilities are limited to matters related to the execution of necessary documentation required by the Developer and prohibitions relating to independent personal deals with the development land. Neither the Executor not the Beneficiaries have previously carried on an enterprise of buying, selling or developing land - noting that Individual B subdivided their main residence in XXXX. Therefore, it is considered that there is no change of purpose for which the whole property is held. The Executor and Beneficiaries entered the contract for the sale of the property and subdivision in order to primarily ensure that each Beneficiary holds onto some of the Land, to which they have an emotional connection and represents their legacy, as well as to realise the best possible return for the Land. The Beneficiaries have no immediate plans to sell their subdivided lots - they plan to retain their inherited subdivided lots for their personal enjoyment and are considering building on the vacant lots. Additional land has not been acquired to facilitate the development. The Land has been used and held by Individuals A and B until their deaths as a capital asset. There has been no accounting/tax treatment suggesting the Land is a business asset. The Management Agreement provides that the Developer is carry out the development in accordance with the obligations and with the authority to exercise all powers referred to in the agreement. It is to be noted that: o the Developer has expertise and experience in undertaking developments of similar nature to the development; o the Executor and Beneficiaries have agreed to appoint the Developer to carry out the Development on and subject to the Management Agreement; o the Developer appointed a development manager for the development on terms and conditions agreed between the parties; and o all applications for rezoning and planning approvals and all preliminary activities were handled solely by the Developer. Whilst there is a coherent plan in place for the subdivision of the land; it is the Developer's plan and not Executor/Beneficiaries' plan - their role in relation to the Development plan in effect is to be a passive one. Neither the Executor nor Beneficiaries have any of the features of a business organisation such as a manager, office or letterhead. No funds were borrowed to finance the acquisition or the subdivision. The level of development of the land will not be beyond that necessary to secure council approval for the subdivision. Further, all preliminary activities, applications for rezoning and planning approvals and all development activities are to be handled solely by the Developer. Broadly, other than certain natters that affect the Beneficiaries' own interests (i.e. the agreed size of the lots allocated to the Beneficiaries), the Developer has been granted the Power of Attorney and other authorisations for the Developer to undertake the development. The Executor will retain X of the X lots. The proposed development does not include the construction of any residential or commercial properties. | Detailed Reasoning - Conclusion: For these reasons, it is considered that the Executors and Beneficiaries activities do not amount to carrying on a business or the undertaking of a profit-making scheme. The long length of time the property was held as a capital asset, the intention at the time of purchase and the lack of change in intention at the time of inheritance, the Executor and Beneficiaries' limited involvement in the activities, together with the lack of risk all suggests the mere realisation of an asset in the most enterprising way. | Detailed Reasoning - Outcome: As the disposal etc. of the Land would be considered a mere realisation of a CGT asset, CGT event A1 will happen in relation to the Land when the X lots are sold to the Developer by the Executor. The time of CGT event A1 is when the Management Agreement and Sale of Land Agreement are executed (i.e. being the condition precedent to the formation of the contract). Pursuant to TD 94/89, the Executor may account for the net capital gains from the sale of the lots within one month after settlement. The X lots pass to the Beneficiaries for the purposes of section 128-20 of the ITAA 1997. Having regard to the terms of the Development and the Beneficiaries' Consent in is reasonable to accept that the time this happens is when the certificates of title to the lots are transferred to the Beneficiaries with respect to their lots - noting that any capital/gain loss in relation to the transfer is disregarded pursuant to Division 128 of the ITAA 1997 (refer to the discussion below under Issue 3). It is noted that CGT event A1 may happen with respect to the future disposal of their lots by the Beneficiaries, where there are no changes to the lots from the time of inheritance to disposal. | Detailed Reasoning - Question 2: Will the disposal of the X lots by the Executor (the sale of 8 lots to the Developer and the distribution of 6 lots to the Beneficiaries), be taxable supplies pursuant to section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | Detailed Reasoning - Answer: No | Detailed Reasoning - Summary Issue 2: The Development activities in this case would not be considered activities that are in the form of a business or in form of an adventure or concern in the nature of trade; they would be considered a mere realisation of a capital asset. | Detailed Reasoning - GST TREATMENT OF LAND SALES: Relevantly, section 9-5 of the GST Act provides, among other things, that you make a taxable supply if the supply is made in the course or furtherance of an enterprise that you carry on. | Detailed Reasoning - Carrying on an enterprise: Section 9-20 of the GST Act provides that the term 'enterprise' includes, among other things, an activity or series of activities done in the form of a business or in the form of an adventure or concern in the nature of trade. The phrase 'carry on' in the context of an enterprise includes doing anything in the course of the commencement or termination of the enterprise. MT 2006/1 provides guidelines on the meaning of carrying on an enterprise. Paragraph 1 of Goods and Services Tax Determination GSTD 2006/6 Goods and services tax: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999? provides that the guidelines in MT 2006/1 are considered to apply equally to the term 'enterprise' as used in the GST Act and can be relied upon for GST purposes. | Detailed Reasoning - In the form of a business: Paragraphs 177 to 179 of MT 2006/1 discuss the main indicators of carrying on a business which include those indicators contained in TR97/11 discussed above. In the form of an adventure or concern in the nature of trade An adventure or concern in the nature of trade' is not defined in the GST Act. Paragraph 234 of MT 2006/1 distinguishes between activities done in the form of a 'business' and those done in the form of 'an adventure or concern in the nature of trade': 234. Ordinarily, the term 'business' would encompass trade engaged in, on a regular or continuous basis. However, an adventure or concern in the nature of trade may be an isolated or one-off transaction that does not amount to a business but which has the characteristics of a business deal. Paragraph 244 of MT 2006/1 further explains that an adventure or concern in the nature of trade includes a commercial activity that does not amount to a business, but which has the characteristics of a business deal, are of a revenue nature. However, the sale of the family home, car and other private assets are not, in the absence of other factors, adventures or concerns in the nature of trade. Paragraph 245 of MT 2006/1 refers to 'the badges of trade' which provides a 'common sense guidance' in reaching a conclusion on whether a transaction has the characteristics of a business deal and whether an asset is held as a trading/revenue asset or as a capital/investment asset held for either investment or personal enjoyment. While an activity such as the selling of an asset may not of itself amount to an enterprise, account should be taken of the other activities leading up to the sale to determine if an enterprise is carried on. The Commissioner has made the following comments about the badges of trade in MT 2006/1: The subject matter of realisation 247. This badge of trade considers the form and the quantity of property acquired. If the property provides either an income or personal enjoyment to the owner it is more likely to be an investment than a trading asset. The length of period of ownership 249. A trading asset is generally dealt with or traded within a short time after acquisition. ... The frequency or number of similar transactions 251. The greater the frequency of similar transactions the greater the likelihood of trade. Supplementary work on or in connection with the property realised 252. Improving property beyond preparing an asset for sale, to bring it into a more marketable condition and gain a better price suggests an element of trade. The circumstances that were responsible for the realisation 253. Trade involves operations of a commercial character. As assets can be sold for reasons other than trade, the circumstances behind the sale need to be considered. For example, a quick resale may have occurred as a result of sudden financial difficulties. Motive 254. If the activities on an objective assessment have the characteristics of trade, the person's motive is not relevant. It is relevant in those cases where the evidence is not conclusive. An intention to resell at the time of acquisition may be an indicator of the resale being an adventure or concern in the nature of trade. 255. Motive is also important in cases if there is a change in character of the asset. For example, a trading asset becoming an investment asset when the person decides to keep the asset, either for income producing purposes or personal enjoyment. Paragraph 258 to 261 of MT 2006/1 further considers the character of an asset and distinguishes between trade/revenue assets and capital/investment assets as follows: Trade v. investment assets 258. United Kingdom cases categorise assets as either trading assets or investment assets. Assets purchased with the intention of holding them for a reasonable period of time, to be held as income producing assets or to be held for the pleasure or enjoyment of the person, are more likely not to be purchased for trading purposes. 259. Examples of investment assets are rental properties, business plant and machinery, the family home, family cars and other private assets. The mere disposal of investment assets does not amount to trade. 260. Assets can change their character but cannot have a dual character at the same time. 261. Investment assets such as business plant and machinery are used by entities in carrying on a business. The purchase and disposal of those types of assets is ordinarily considered not to be an adventure or concern in the nature of trade for UK income tax purposes. | Detailed Reasoning - Isolated Property Transactions: Paragraphs 262 to 267 of MT 2006/1 apply the 'badges of trade' concept discussed above to isolated property transactions, in order to determine whether an isolated property transaction can be considered to be an enterprise in the form of an adventure or concern in the nature of trade. Paragraph 262 of MT 2006/1 acknowledges that the question of whether an entity is carrying on an enterprise often arises where there are 'one-offs' or isolated real property transactions. Paragraph 263 of MT 2006/1 continues, stating that the issue to be decided is whether the activities being conducted are an enterprise in that they are of a revenue nature as they are considered to be activities of carrying on a business or an adventure or concern in the nature of trade (profit making undertaking or scheme) as opposed to the mere realisation of a capital asset. Paragraph 264 of MT 2006/1 discusses two seminal cases in this area: Statham & Anor v Federal Commissioner of Taxation 89 ATC 4070 ( Statham) and Casimaty v FC of T 97 ATC 5135 (Casimaty) . Paragraph 265 of MT 2006/1 extracts the key elements of both cases and provides a list of factors that can be used to assist in determining whether isolated property transactions are an adventure or concern in the nature of trade or a mere realisation of a capital asset: 265. From the Statham and Casimaty cases a list of factors can be ascertained that provide assistance in determining whether activities are a business or an adventure or concern in the nature of trade (a profit-making undertaking or scheme being the Australian equivalent, see paragraphs 233 to 242 of this Ruling). If several of these factors are present it may be an indication that a business or an adventure or concern in the nature of trade is being carried on. These factors are as follows: • there is a change of purpose for which the land is held; • additional land is acquired to be added to the original parcel of land; • the parcel of land is brought into account as a business asset; • there is a coherent plan for the subdivision of land; • there is a business organisation - for example, a manager, office and letterhead; • borrowed funds financed the acquisition or subdivision; • interest on money borrowed to defray subdivisional costs was claimed as a business expense; • there is a level of development of the land beyond that necessary to secure council approval for the subdivision; and • buildings have been erected on the land. In addition to the above, paragraphs 266 and 267 of MT 2006/1 provides that there may be other relevant factors outside this list that present on the facts of a given case, and that no individual factor is determinative to the question of whether an enterprise is present: 266. In determining whether activities relating to isolated transactions are an enterprise or are the mere realisation of a capital asset, it is necessary to examine the facts and circumstances of each particular case. This may require a consideration of the factors outlined above, however there may also be other relevant factors that need to be weighed up as part of the process of reaching an overall conclusion. No single factor will be determinative rather it will be a combination of factors that will lead to a conclusion as to the character of the activities. 267. No two cases are likely to be exactly the same. For instance, while the conclusions reached in the Statham and Casimaty cases were similar, different facts and factors were considered to reach the respective conclusions. Paragraphs 271 to 287 of MT 2006/1 set out examples of subdivisions that are enterprises whilst paragraphs 288 to 302 set out examples of subdivisions that are not enterprises. | Detailed Reasoning - Application in these circumstances: For the reasons set above, the Development activities in this case would not be considered activities that are in the form of a business or in form of an adventure or concern in the nature of trade. We consider that the activities undertaken, or that will be undertaken, in the subdivision of the Land and the subsequent Distribution to the Developer and the Beneficiaries, do not display the salient indicators of a business which, among other things, include transactions entered into a continuous and repetitive basis. The indicators set out in paragraph 178 of MT2006/1 (which are identical to those factors included in paragraph 13 of TR 97/11) are not present to a sufficient degree to warrant the conclusion that you are carrying on an enterprise in the form of a business. The factors taken into account in determining that the Development amounts to no more than a mere realisation of an asset for income tax purposes (as discussed above under Issue 1), are equally relevant in determining whether or not the Development activities amount to an enterprise of an adventure or concern in the nature of trade for GST purposes. These factors include the length of ownership, frequency or number of similar transactions, previous experience, financing, infrastructure, and the size and scale of the project etc. On balance, having considered the facts of the case against the 'badges of trade' and other factors discussed above under Issue 1, we consider the activities undertaken, or that will be undertaken, will not amount to an enterprise for GST purposes pursuant to subsection 9-20(1). Consequently, the supply of the subdivided lots will not be taxable supplies for the purposes of section 9-5 of the GST Act and no GST will be payable. | Detailed Reasoning - Question 3: Will the capital gain on the distribution of the 6 lots to the Beneficiaries be disregarded pursuant to Division 128 of the ITAA 1997? | Detailed Reasoning - Answer: Yes. | Detailed Reasoning - Summary Issue 3: As ownership of the property will remain the same before and after the Development, the Executor will be deemed to have acquired the Land at the time of deceased's death, and no CGT event will occur with respect to the Land on its subdivision into lots. Any capital gain or capital loss the Executor makes when the lots pass to the Beneficiaries is disregarded. | Detailed Reasoning - Subdivision of land: Pursuant to section 112-25 of the ITAA 1997, the subdividing of the land is not itself a CGT event. Taxation Determination TD 97/3 Income tax: capital gains: if a parcel of land acquired after 19 September 1985 is subdivided into lots ('blocks'), do Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 treat a disposal of a block of the subdivided land as the disposal of part of an asset (the original land parcel) or the disposal of an asset in its own right (the subdivided block)? explains that the effect of registering separate new titles under the subdivision is, for the purposes of Parts 3-1 and 3-3 of ITAA 1997, to divide the original land parcel into two or more assets (being the subdivided blocks). The subdivided blocks are then treated as separate assets under the capital gains provisions. They are taken to have been acquired by the owner of the original land parcel when that original parcel was acquired. CGT Determination Number 7 TD 7 Capital Gains: What are the CGT consequences of sub-dividing pre-CGT land? confirms that where pre-CGT land is sub-divided after 19 September 1985 the land will maintain its pre-CGT acquisition date because no CGT event has happened. | Detailed Reasoning - Effect of death: Section 128-15 of the ITAA 1997 sets out what happens to a CGT asset that a deceased taxpayer owned just before their death that devolves to their legal personal representative or passes to a beneficiary in their estate. Relevantly, subsection 128-15(3) of the ITAA 1997 provides that any capital gain or capital loss the legal personal representative makes when a CGT asset passes to a beneficiary of a deceased estate is disregarded. A legal personal representative is defined under section 995-1 of the ITAA 1997 to include an executor or administrator of an estate of an individual who has died. ATO Practice Statement Law Administration PS LA 2003/12 Capital gains tax treatment of the trustee of a testamentary trust confirm the operation of Division 128 of the ITAA 1997 in these circumstances. Relevantly, there is no taxing point in relation to assets owned by a deceased person until they cease to be owned by the beneficiaries named in the will - unless there is an earlier disposal by the legal personal representative to a third party or CGT event K3 applies). Subsection 128-15(4) sets out the cost base rules. Generally, if the deceased acquired the asset before 20 September 1985 (that is, pre-CGT), the acquisition cost will be equal to the market value at the date of the deceased's death. If the deceased acquired the asset on or after 20 September 1985, the beneficiary's acquisition cost will be determined in accordance with table items 1, 2, 3 or 3A of subsection 128-15(4) of the ITAA 1997. Relevantly, Item 3 in the table under section 109-55 of the ITAA 1997 deals with a surviving joint tenant's acquisition of a deceased joint tenant's interest in a CGT asset - and provides that a surviving joint tenant acquires the deceased joint tenant's interest in the CGT asset when the deceased died. Section 128-50 of the ITAA 1997 governs the acquisition and cost base in these circumstances. Division 128 of the ITAA 1997 requires that the assets pass to the beneficiary under the terms of the Will including by appropriation. In broad terms, paragraph 128-20(1)(c) provides that a CGT asset passes to a beneficiary in an estate if the beneficiary becomes the owner of the asset because it is appropriated to the beneficiary by a legal personal representative in satisfaction of a pecuniary legacy or some other interest or share in the estate. Taxation Determination TD 2004/3 Income tax: capital gains: does an asset 'pass' to a beneficiary of a deceased estate under section 128-20 of the Income Tax Assessment Act 1997 if the beneficiary becomes absolutely entitled to the asset as against the trustee of the estate? (TD 2004/3) explains that a CGT asset owned by a deceased person at the time of their death passes to a beneficiary of the deceased's estate if the beneficiary becomes the owner of the asset under the will or in one of the other ways set out in subsection 128-20(1) of the ITAA 1997 and sets out the CGT consequences: 3. Any capital gain or loss made when the asset passes to a beneficiary of the deceased estate is disregarded under subsection 128-15(3) of the ITAA 1997 (unless CGT event K3 in section 104-215 of the ITAA 1997 happens as a result of the asset passing to a tax-advantaged beneficiary). However, the beneficiary will be the relevant taxpayer if a CGT event happens to the asset after it has passed to the beneficiary. 4. While it is clear that an asset has passed to a beneficiary once legal ownership of the asset has transferred to the beneficiary, we consider that an asset can pass to a beneficiary prior to transfer if the beneficiary becomes absolutely entitled to the asset as against the trustee. It is considered that there is nothing in section 128-20 of the ITAA 1997 that makes 'passing' dependent upon the acquisition of legal ownership. 5. CGT event E5 in section 104-75 of ITAA 1997 does not happen when a beneficiary becomes absolutely entitled to an asset that a deceased person owned at the time of their death. Taxation Ruling IT 2622 Income tax: present entitlement during the stages of administration of deceased estates (IT 2622) sets out the stages of administration and sets out income tax treatment of income derived prior to the administration of the estate: | Detailed Reasoning - Assessability of Income of a Deceased Estate: 7. In a deceased estate, whether a beneficiary is presently entitled to a share of the income of a trust estate for the purposes of Division 6 of Part III of the Act depends on: (a)The stage reached in the administration of the deceased estate. (b)The terms of the deceased's will or codicil, trust law and principles enunciated and orders made by the Courts. (c)Whether any discretionary payments have been made to the beneficiary by the executor or trustee. 8. Division 6 requires the ascertainment of the "net income" of the trust estate as defined in subsection 95(1) of the Act. The net income of the trust is then assessed to the beneficiary or to the trustee depending on whether the beneficiary is presently entitled to income of the trust estate or is under a legal disability. 9. Beneficiaries cannot enjoy present entitlement to income derived by a deceased estate during the administration of the estate. Income of a deceased estate in income years before the administration of the estate is complete, is the income of the executors or administrators and is not income of the beneficiaries... ... 13. Until the estate of a testator has been fully administered and the net residue ascertained, a residuary beneficiary has no proprietary interest in any specific investment forming part of the estate or in the income from any such investment. Both corpus and income are the property of the executors or administrators:... IT 2622 explains that a fiduciary obligation is assumed by the executor or administrator, on the death of a taxpayer, in favour of the beneficiaries of the estate. In broad terms, the essential elements of a trust are present in an executorship and one of the most important duties of a trustee is to obey the terms of the trust. From this it follows that any departure from the terms of the trust and any negligence, whether of act or omission in the performance of the duties of the trust, will be a breach of trust. However, a beneficiary may be barred from taking proceedings against a trustee as a result of a consent to, acquiescence in or release of the breach of trust. (Refer to Jacobs' Law of Trusts in Australia 8 th edition 2016.) This means that whilst the duty of the executor is to carry out the terms of the Will, and it would be a breach of trust to do otherwise, an executor may distribute assets other than as set out in the Will with the informed consent of all adult beneficiaries. | Detailed Reasoning - Application in these circumstances: As ownership of the property will remain the same before and after the Development, the Executor will be deemed to have acquired the Land at the time of deceased's death, and no CGT event will occur with respect to the Land on its subdivision into lots (section 112-25 of the ITAA 1997). Pursuant to subsection 128-15(3) of the ITAA 1997 any capital gain or capital loss the Executor makes when the 6 lots are distributed to the Beneficiaries is disregarded. The terms of the Beneficiary Consent simply confirm that to which they are already entitled to under the terms of Individual B's Will (being an equal share of the assets of the Estate). In these circumstances, it is reasonable to accept that the assets (being the lots) do not pass to the Beneficiaries until title is transferred to the Beneficiaries. | Detailed Reasoning - Question 4: Will the Commissioner exercise the discretion under section 99A of the Income Tax Assessment Act 1936 (ITAA 1936)to assess the income of the trust estate under section 99 of the ITAA 1936? | Detailed Reasoning - Answer: Yes. | Detailed Reasoning - Summary Issue 4: Having regard to the relevant facts and circumstances, the Commissioner is of the opinion that it would be unreasonable that section 99A of the ITAA 1936 should apply in relation to the trust estate in relation to the relevant years of income. Accordingly, section 99 of the ITAA 1936 will apply. | Detailed Reasoning - Detailed reasoning: Sections 99 and 99A of the ITAA 1936 apply to assess the trustee of a trust estate on income to which no beneficiary is presently entitled, which is retained or accumulated by the trustee. Section 99A of the ITAA 1936 does not apply in relation to a trust estate that: if the Commissioner forms the opinion that it would be unreasonable to apply section 99A of the ITAA 1936 with respect to the trust estate in relation to that year of income. In forming an opinion pursuant to section 99A(2) of the ITAA 1936 whether it would be unreasonable for section 99A to apply to a particular trust estate in relation to a particular year of income, the Commissioner is directed by subsection 99A(3) to have regard to certain matters, including: Broadly, these are: a) The circumstances in which and conditions upon which property was transferred to a trust estate, benefits provided for a trust estate or income was derived by the trust estate, or special rights or privileges whether or not they have been exercised were conferred on or attached to property of the trust estate - including whether a person who, after the initial settlement is made, either alone or with others directly or indirectly transfers or lends property to the trust estate, channels income into the estate, confers benefits on the estate, or confers special privileges on the property of the estate. b) The number of trust estates to which a person has transferred assets, provided benefits or conferred special privileges. c) Any such other matters, if any, as the Commissioner thinks fit. This includes whether the trustee has lent money to others. In the case of a deceased estate, subsection 99(3A) of the ITAA 1936, read in conjunction with paragraph 99A(3)(a), provides that the Commissioner is to have regard to the circumstances in which and any conditions upon which property was acquired by, or lent to, the deceased person, income was derived by the deceased person, benefits were conferred on the deceased person, or special rights or privileges were conferred on, or attached to, property of the deceased person. The Commissioner issued Public Information Bulletin No.4 Income Of A Trust Estate To Which No Beneficiary Is Presently Entitled (Bulletin) in April 1965 to provide guidance on the circumstances and matters he considers to be relevant or irrelevant for the purpose of forming an opinion for the purposes of subsection 99A(2) of the ITAA 1936. In broad terms, the matters that relate to the circumstances in which any assets were transferred to a trust estate or benefits provided for a trust estate (including any condition imposed in relation to the transfer of assets or the provision of benefits), address the source of the trust capital and trust income (including whether a person who, after the initial settlement is made, either alone or with others directly or indirectly transfers or lends property to the trust estate, channels income into the estate, confers benefits on the estate, or confers special privileges on the property of the estate). In ITR 1447, issued on 24 January 1979, the Commissioner indicates that, generally, an estate of an "ordinary and traditional kind' where there is no tax avoidance will be taxed at the normal progressive marginal rates under section 99 of the ITAA 1936. The Commissioner explains that a deceased estate of the ordinary and traditional kind has the following characteristics: In determining the weight to be given to the matters described in subsection 99A(3) , Windeyer J has stated in Giris Pty Ltd v FCT (1969) 119 CLR 365; 69 ATC 4015; (1969) 1 ATR 3 that: The Commissioner is to ask himself whether it would be unreasonable that section 99A of the ITAA should apply to any particular trust estate. But the idea of reasonableness seems to be here amorphous....It does not clearly emerge from the Act in respect of what matter - or whose interest...he is to consider whether it would be reasonable or unreasonable to apply section 99A in the case of any particular trust estate. He is to have regard to certain stated matters; but what weight or influence each is to have is not made clear.....That [the Commissioner] has formulated certain considerations by which he is guided, and made them publicly known, may be important as showing that in the exercise of his statutory discretion he acts honestly, consistently and, as he thinks, in accordance with the legislative purpose. That purpose I take it is to enable the Commissioner to keep sec 99A as an instrument to prevent avoidance of taxation by the medium of trusts, but not to use it when to do so would seem to him not in accordance with that purpose. The favourable exercise of the Commissioner's discretion under subsection 99A(2) of the ITAA 1936 means the highest rate of income tax does not apply to a trust estate. If no part of the net income is distributed to beneficiaries, and section 99A of the ITAA 1936 is considered not to apply, then the trustee is assessed under section 99 of the ITAA 1936. | Detailed Reasoning - Application in these circumstances: In these circumstances, the trust is a deceased estate satisfying the eligibility for the Commissioner's discretion. Having regard to the following factors, it would be unreasonable to apply the special rate of tax under section 99A of the ITAA 1936 to the trust income to which no beneficiary is presently entitled: Accordingly, the Commissioner will exercise his discretion in these circumstances and assess the trust income under section 99 of the ITAA 1936 for the relevant income years (being the income years for which this Ruling applies).

Question 1: Will the disposal of the X lots by the Executor (the sale of X lots to the Developer and the distribution of X lots to the Beneficiaries) be subject only to the capital gains tax (CGT) provisions set out in Part 3-1 and Part 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997)? | Will the subsequent disposal of their X lots by the Beneficiaries, where there have been no changes to the inherited lots, be subject only to the CGT provisions set out in Part 3-1 and Part 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997)? | The estate of the late Individual E (Individual E). | The Management Agreement sets out the terms under which the Developer is to subdivide and develop the Land generally in accordance with the plan prepared by the Developer for the PC approval (Development Plan). | The Management Agreement is subject to the Sale of Land Agreement, being the agreement between the Developer and the Executor for the Developer to purchase all of the Land save those parts to be retained by the Executor or ceded, transferred, taken or resumed by an Authority in the course of or as consideration for the Development, dated on or about the date of this Agreement. | From the date of the Management Agreement, the Executor appoints the Developer to do all things which the Developer considers necessary and desirable to undertake the Development consistent with the Development Plan (Management Services), in consideration for the Executor entering into the Sale of Land Agreement. | The Management Services to be provided by the Developer consist of the land management and subdivision of land services - the Developer will, at its sole cost, be responsible for the management, administration and control of the Land for the purposes of completing the Development and will do all things necessary to complete the Development throughout the term of its appointment under this Agreement. The Developer's duties include but are not limited to: | No title in the Land will pass to the Developer or any other entity - other than those subject to the terms of the Sale of Land Agreement. | The Executor's role under the Management Agreement includes: | All project costs (broadly, all third-party costs, fees and outgoings to carry out and complete) for the Development will be borne by the Developer. | The Executor is not obtaining finance to fund the Development costs as the Executor's payment for the Developer's Management Services will met through the transfer of lots to the Developer pursuant to the Sale of Land Agreement. | Execution of Management Agreement - the execution of the Management Agreement on or about the date of this document; and | Performance and Completion of Management Agreement - the performance by the Buyer and the Seller of their obligations under the Management Agreement, and the successful completion of the Development. | Development and Expiry Date - the Developer satisfying all requirements and conditions of the PC Approval by the Expiry Date and the PC otherwise unconditionally approving the Development. Expiry Date means the date specified in the PC Approval as the date when all conditions for approval of the development must be completed. | The Land (with the residence). | A shop and caravan park (which was sold in XXXX). | A bank account (that generates interest). | Question 1: Will the disposal of the X lots by the Executor (the sale of X lots to the Developer and the distribution of X lots to the Beneficiaries) be subject only to the CGT provisions set out in Part 3-1 and Part 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997)? | whether the activity has a significant commercial purpose or character; | whether the taxpayer has more than just an intention to engage in business; | whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity; | whether there is repetition and regularity of the activity; | whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business; | whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit; | the size, scale and permanency of the activity; and | whether the activity is better described as a hobby, a form of recreation or a sporting activity. | those transactions outside the ordinary course of business of a taxpayer carrying on a business, and | those transactions entered into by non-business taxpayers. | the intention or purpose in entering into the transaction was to make a profit or gain, and | the transaction was entered into, and the profit was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction. | the nature of the entity undertaking the operation or transaction | the nature and scale of other activities undertaken by the taxpayer | the amount of money involved in the operation or transaction and the magnitude of the profit sought or obtained | the nature, scale and complexity of the operation or transaction | the manner in which the operation or transaction was entered into or carried out | the nature of any connection between the relevant taxpayer and any other party to the operation or transaction | if the transaction involves the acquisition and disposal of property, the nature of that property, and | the timing of the transaction or the various steps in the transaction. | There is a coherent plan for the subdivision of the land | The Developer's costs in carrying out the development are to be covered by the Development Fee - the fee being the unimproved value of the X vacant blocks. | The Developer carries the Development costs. | The Executor remains the registered proprietor of the land and beneficial owner until transfer of the parcels to lots to the Developer (and the Beneficiaries under the terms of Individual B's Will). | The timing of the transactions and the various steps that comprise the Development are to be controlled by the Developer. | arises from a will or intestacy (i.e. which included both the estate of a deceased person and testamentary trusts established pursuant to the terms of a will) - subparagraphs 99A(2)(a)(i) and (ii); or | relates to bankruptcy - paragraphs 99A(2)(b) and (c); or | consists of property referred to in paragraph 102AG(2)(c) - paragraph 99A(2)(d) | One whose assets come directly from the assets of the deceased person. Ordinarily, the assets would be those of the deceased person, for example, a house or income producing property, or assets purchased subsequent to the death of the deceased out of funds arising from the sale or conversion of those assets by the executors acting in their course of their duties. | There is a definable relationship, ordinarily of blood or marriage, between the deceased person and the beneficiaries. | The trust estate is a deceased estate that resulted from a will and was established as a result of the death of the testator. | There is a definable relationship ordinarily of blood or marriage between the deceased and the beneficiaries. There are no suggestions that the manner in which the trust was created was for any reason other than the ordinary and traditional kind. | The assets come directly from the assets of the deceased and the income of the Estate is only derived from assets held or deemed to belong to the Estate as at the date of death of the deceased. | The executors/trustees have not borrowed money from others. | The executors/trustees have not lent money to others. | Administration of the estate is incomplete and therefore there are no presently entitled beneficiaries. The delay is due to the family coping with deaths of Individual B and Individual E within a short period of time, the impact of COVID-19, and development of the Land.