Part C Daniel and Kate purchased a sugar cane farm in North Queensland in 1983. They have been wanting to retire for the

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Part C
Daniel and Kate purchased a sugar cane farm in North Queensland
in 1983. They have been
wanting to retire for the past few years, however, none of their
children want to take over
operating the farm. They stop planting new crops in November
2020, and after considering their
options, decide to subdivide the farm and sell the land as
housing blocks.
Daniel and Kate arranged for council permission to subdivide the
land, then commenced engaging
contractors to build the necessary roads, water and electricity
connections. They borrowed money
to fund the development required to meet the council
regulations. The land was subdivided into
20 separate blocks of land.
Marketing of the land was arranged with a local real estate
agent as well as online advertisements.
During the year ended 30 June 2022, ten of the blocks were sold
for a total of $2,500,000.
Required:
Advise Daniel and Kate whether any amount will be assessable as
ordinary income in the year
ended 30 June 2022? You must support your discussion with
references to legislation, case law
and/or taxation rulings. Calculations are not required.
Identification of legal issue:
Application:
Conclusion: