Bob is an employee accountant and five years ago he purchased some acreage land in regional Queensland. His intention at the time was to build his dream home and establish a hobby farm. He had plans designed and developed for this. However, due to the mining boom he decided to subdivide and develop the land.
He set up a company to undertake the development and has employed his wife for administrative work. All sales of the subdivided land are to take place in the 2019 income year and he expects to make around $1.8 million in profits.
Which of the following statement is correct in relation to Bob’s information?
It appears Bob’s land development is a separate business and therefore any proceeds from the sale would be ordinary income.
Since Bob intended to build a house on the land and live there, any future sale proceeds would \be exempt income.
Since the disposal of the blocks will be a CGT event, the profits can never be ordinary income.
The disposal of the blocks is an isolated and extraordinary transaction and therefore statutory income.