Zestful Ventures Pty. Ltd. has a mixed grazing business. It's aggregated turnover in the 2021/22 financial...

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Zestful Ventures Pty. Ltd. has a mixed grazing business. It's aggregated turnover in the 2021/22 financial year was $2.5 million. Zestful owns 670 acres of land in New South Wales. Its livestock are rotated through different paddocks. The region where this land is located has a rapidly expanding population. Mid-way through 2022, Zestful's neighbours advertised some adjoining land for sale, and Zestful sees this as a good business opportunity. In July 2022, Zestful sold some shares which it had purchased five years earlier. The original cost of the shares was $2 million and Zestful sold these shares for $3.5 million. In August 2022, Zestful uses the funds from this sale to partially fund the purchase of the adjoining land (10 acres). Zestful intends on using this land to construct a supermarket, five other retail stores and a commercial office precinct, including high-rise towers. It begins constructing the supermarket, retail stores and part of the intended commercial office precinct. However, due to zoning restrictions Zestful is not able to build the high-rise towers. As a result, in January 2023 Zestful decided to sell half an acre of the land. Before advertising the land, to try to make it attractive to potential purchasers, Zestful paid many expenses to subdivide the land, so that it was made up of 4 parcels. The expenses included application fees to the local council and the costs of installing infrastructure including roads, drainage and water and sewerage systems. One of these parcels was sold in March 2023 for $495,000. The other parcels are currently unsold. Required: 1. Advise Zestful Pty. Ltd. as to the tax consequences of each transaction which is mentioned in the scenario above. Please refer to relevant Australian tax legislation, as well as case law in your answer. 2. Despite deciding to sell the half an acre of land in January 2023, Zestful again changes its intentions and now wants to build residential townhouses on the remaining 3 parcels of land. It would then rent out the town houses. It would incur various expenses in building the town houses and renting them out. Please advise Zestful of the tax and accounting consequences of doing this, including whether expenses relating to building the town houses and renting them out may be deductible. Refer to Australian tax law and relevant accounting standards (AASBs) in your answer. In relation to the accounting standards, please look at this website: https://aasb.gov.au/pronouncements/accounting-standards/ Zestful Ventures Pty. Ltd. has a mixed grazing business. It's aggregated turnover in the 2021/22 financial year was $2.5 million. Zestful owns 670 acres of land in New South Wales. Its livestock are rotated through different paddocks. The region where this land is located has a rapidly expanding population. Mid-way through 2022, Zestful's neighbours advertised some adjoining land for sale, and Zestful sees this as a good business opportunity. In July 2022, Zestful sold some shares which it had purchased five years earlier. The original cost of the shares was $2 million and Zestful sold these shares for $3.5 million. In August 2022, Zestful uses the funds from this sale to partially fund the purchase of the adjoining land (10 acres). Zestful intends on using this land to construct a supermarket, five other retail stores and a commercial office precinct, including high-rise towers. It begins constructing the supermarket, retail stores and part of the intended commercial office precinct. However, due to zoning restrictions Zestful is not able to build the high-rise towers. As a result, in January 2023 Zestful decided to sell half an acre of the land. Before advertising the land, to try to make it attractive to potential purchasers, Zestful paid many expenses to subdivide the land, so that it was made up of 4 parcels. The expenses included application fees to the local council and the costs of installing infrastructure including roads, drainage and water and sewerage systems. One of these parcels was sold in March 2023 for $495,000. The other parcels are currently unsold. Required: 1. Advise Zestful Pty. Ltd. as to the tax consequences of each transaction which is mentioned in the scenario above. Please refer to relevant Australian tax legislation, as well as case law in your answer. 2. Despite deciding to sell the half an acre of land in January 2023, Zestful again changes its intentions and now wants to build residential townhouses on the remaining 3 parcels of land. It would then rent out the town houses. It would incur various expenses in building the town houses and renting them out. Please advise Zestful of the tax and accounting consequences of doing this, including whether expenses relating to building the town houses and renting them out may be deductible. Refer to Australian tax law and relevant accounting standards (AASBs) in your answer. In relation to the accounting standards, please look at this website: https://aasb.gov.au/pronouncements/accounting-standards/

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Tax Consequences of Zestful Pty Ltds Transactions a Sale of Shares in July 2022 Capital Gains Tax CGT may apply to the sale of shares The original cos... View the full answer