6 November 1985, Aja bought a property in South Yarra. This property included two old tennis courts...
Question:
6 November 1985, Aja bought a property in South Yarra. This property included two old tennis courts next to the house, which was in poor condition. She purchased the property for two reasons: So that she and her family could live in the house: and So that she could build two apartments on the land where the tennis courts were and sell them at a profit. After Aja purchased the property, the tennis club next door to the property in South Yarra offered to purchase the old tennis courts from her, but only if Aja restored them to good condition. Aja accepted the club's offer rather than going ahead with her plan to build and sell apartments. Aja spent $80,000 on preparing the tennis courts for sale. This involved a great deal of work. She had to resurface the tennis courts and build a new fence between her house and the tennis courts. She then sold the tennis courts to the tennis club in the current tax year for $200,000.
Required:
Please discuss whether the $200,000 would be an assessable income for Aja. Where appropriate, refer to case law and legislation in your answer.
The Legal Environment of Business
ISBN: 978-0538473996
11th Edition
Authors: Roger E Meiners, Al H. Ringleb, Frances L. Edwards