Law on property

In 2015 Win" rel="nofollow">innie, an Australian resident in" rel="nofollow">individual, sold her horse breedin" rel="nofollow">ing busin" rel="nofollow">iness based in" rel="nofollow">in the south eastern suburbs of Melbourne. The purchaser of the busin" rel="nofollow">iness did not want to buy the land. The real estate comprises 10 hectares which cost her $1m in" rel="nofollow">in 2005. Win" rel="nofollow">innie put the entire real estate up for auction but it failed to reach her reserve price of $10m and was passed in" rel="nofollow">in. Her real estate agent had suggested the reserve was a fair market value but at the moment no buyers were in" rel="nofollow">interested in" rel="nofollow">in such a large parcel of land. She sought advice from agents and accountants who suggested that smaller blocks of land would be more affordable for home buyers. Potentially, 10 vacant one hectare blocks would sell for $2m each and would require min" rel="nofollow">inimal costs to subdivide. However, Win" rel="nofollow">innie was also advised that 50 townhouses could be built at a cost of $100,000 each and they could sell for $1m e In July 2016, Win" rel="nofollow">innie in" rel="nofollow">installed office cabin" rel="nofollow">ins on the site and personally managed the entire construction, sales and marketin" rel="nofollow">ing activities. 50 townhouses on equal size and value blocks were constructed and by 30 June 2017 half of these had been sold for a total of $25m. Required: Advise Win" rel="nofollow">innie of the possible in" rel="nofollow">income tax consequences of the $25m real estate sales this year. You should discuss any alternative views based on the facts, usin" rel="nofollow">ing quality legal references. Determin" rel="nofollow">ine the assessable in" rel="nofollow">income resultin" rel="nofollow">ing from each alternative view. Fin" rel="nofollow">inally, provide your opin" rel="nofollow">inion on which you thin" rel="nofollow">ink is the better or correct outcome.