Share
In the AAT case of SWPD and Commissioner of Taxation [2020] AATA 555 the taxpayer acquired 343.95 hectares of land (primarily covered by native forest) in 1992 for $180,000, subsequently sold it in 2016 for $2.75m, and sought to access the small business CGT concessions.
The sole issue of the case was whether the taxpayer was carrying on a business for the purpose of the small business CGT concessions.
The former owner of the land had selectively logged and a plantation of approximately five hectares of native trees planted.
However, during the period in which the taxpayer owned the land no harvesting activities took place. Rather, the activities that took place were maintaining the roads and fences on the property, clearing fallen logs, eradicating gorse weed and establishing a new access road as the previous road (across a neighbour’s property) was in the wrong place.
Expert evidence was that the taxpayer’s activities were consistent with a forestry business although the extent, particularly in respect of road maintenance during the growth stage, varies within the industry.
The taxpayer’s view was that property was great value given its size, it had a well-developed road system which was useful for future logging and it was close to a mill, which would minimise transport costs. The taxpayer said his plan was to sit on the property and wait as it was too big to weed or water and did not need daily or weekly attention, although it did need maintenance works to the boundary and roads. The taxpayer said he saw the property as a good business opportunity.
The taxpayer did not sell the property by choice. He was going through a divorce and was forced to sell the property. He said that it had otherwise been his intention to keep the property for his children.
The AAT held that the taxpayer was carrying on a business and satisfied the basic conditions to access the small business CGT concessions.