Graham and Gina are shareholders and directors of Great Goat Pty

Subject:SociologyPrice:2.86 Bought3

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Graham and Gina are shareholders and directors of Great Goat Pty. Ltd., which was formed eight years ago. For many years, Graham and Gina have been involved in property development. Seven years ago, Great Goat purchased two properties in an area where there was extensive real estate development. For six years, the properties were used as a pasture for the goats and the properties were improved for that purpose.

 

Owing to unforeseen circumstances, the raising of the goats for meat proved to be unprofitable and there was talk of plans for a zoning change in the near future. This would mean the properties could only be disposed of in 100-hectare lots instead of 25-hectare lots. Great Goat therefore arranged to subdivide the land up into 25-hectare blocks and sold the whole property to one purchaser. The Commissioner assessed Great Goat on the gross receipts, citing s6-5 of ITAA97 as his reasoning.

 

Required

Great Goat is concerned about the Commissioner's assessment and seeks your advice on whether, and how, the amount received could be characterised as assessable under s6-5 of ITAA97.

 

consider whether the sale is an isolated transaction, a realisation of an asset, an extraordinary transaction - and the relevance of a profit motive. Refer to case law and legislation in your answer