Topic 3: Land Sales

Statutory Hierarchy Acronym: P.B.T.S. B.D.R.

Purpose (CB 6), Businesses (CB 7), Ten-year rules (CB 9-11), Subdivisions <10 yrs (CB 12) | Brightline (CB 6A) | Deferred subdivisions ≥10 yrs (CB 13), Rezoning (CB 14)[cite: 3].

Application of Statutory Hierarchy

The land sales sections apply in strict, mutually exclusive order; if an earlier section catches a transaction, lower sections do not apply[cite: 3].

Section CB 6 (Purpose or Intention)

Land proceeds are taxable if acquired with one or more purposes or intentions of disposing of it, determined strictly at the time of acquisition[cite: 3].

Section CB 7 (Land Businesses)

Taxes dispositions of land acquired for the purposes of land dealing, developing/subdividing, or building (including land bought for an associate's business)[cite: 3].

Section CB 7 (Builders Requirement)

For a builder to be caught under CB 7(1)(c), they must make improvements to the land before or after it was acquired[cite: 3].

Associated Persons: Company and Person

Associated under Section YB if the person holds 25% or more of the voting interest[cite: 3].

Associated Persons: Two Companies

Associated under Section YB if there is 50% or more common voting interests[cite: 3].

Associated Persons: Relatives

Associated within 2 degrees of blood relationship (parents, grandparents, children, grandchildren) or by marriage, civil union, or de facto partnership[cite: 3].

The "Tainting" Rule Implication

If you are associated with a dealer, developer, or builder, any land you buy and sell within 10 years becomes automatically taxable under CB 9-11, even if bought purely for personal use[cite: 3].

Section CB 9 (Land Dealers 10-Year Rule)

Taxes proceeds of any land disposed of within 10 years of acquisition by a land dealer or any person associated with them[cite: 3].

Section CB 10 (Developers 10-Year Rule)

Taxes proceeds of any land disposed of within 10 years of acquisition by a land developer/subdivider or any person associated with them[cite: 3].

Section CB 11 (Builders 10-Year Rule)

Taxes land disposed of within 10 years of completion of improvements by a builder or their associates (improvements must be made)[cite: 3].

Section CB 12 (Subdivisions Under 10 Years)

Taxes sales where a subdivision or development scheme started within 10 years of acquisition, regardless of whether it is a business[cite: 3].

Section CB 6A (Brightline Test Period)

Taxes the sale of residential land owned for less than 2 years from acquisition[cite: 3].

Excluded from "Residential Land" (CB 6A)

Farm land and land predominantly used as commercial business premises are excluded; share sales in land-owning companies are also not caught[cite: 3].

Ring-Fencing of Brightline Losses (EL 20)

Any loss made on a residential property sale under CB 6A is quarantined and can only offset profits from other taxable land sales[cite: 3].

Section CB 13 (Deferred Subdivisions)

Taxes sales where a subdivision scheme started 10+ years after acquisition; must involve significant development work (cost concession uses market value at scheme start)[cite: 3].

Section CB 14 (Rezoning Profits)

Residual section taxing land sold within 10 years of acquisition where at least 20% of the profit is a windfall gain due to council rezoning[cite: 3].

Exemption: Section CB 16 (Own Residence)

Exempts land used as the taxpayer's and their family's residence from CB 6, CB 7, and CB 9-11[cite: 3].

Section CB 16 "Regular Pattern" Disqualification

The CB 16 residence exemption fails completely if there is a regular pattern of transactions (e.g., repeatedly building, occupying, and selling)[cite: 3].

Exemption: Section CB 16A (Brightline Main Home)

Exempts property under CB 6A if it was the seller's main home for predominantly the 2-year period; holiday homes fail and it cannot be used more than twice in 2 years[cite: 3].

Exemption: Section CB 19 (Business Premises)

Exempts land used for the taxpayer's own business premises; fails if there is a regular pattern of acquiring/erecting premises and moving[cite: 3].

Exemption: Section CB 23 (Investment Land)

Exempts subdivisions/developments under CB 12 or CB 13 undertaken specifically to derive rental income[cite: 3].