AUSTRALIAN TAX LAW

Peter Miles owned rural property for 20 years. On 1^st July 2017 he sold the rural properties and vacant lands and retired on the Sunshine Coast , Queensland. On the 1^st September that year he purchased half an acre of land near the beach for $800,000. In order to increase his retirement funds Peter appointed a builder to build six townhouses at a cost of $300,000 each. At the same time he asked his accountant for advice on expected rental return from each of the townhouses. The townhouses were completed on 12^th June 2018.

Peter decided to live in one of the townhouses and he rented the others on a yearly basis. All the townhouses had a separate strata title. In December 2019 Peter sold three of the townhouses for $550,000 each.

He decided to then purchase another block of land in Queensland for $1.5million and intended to build and develop a combination of units and townhouses for resale.

Required :

State your views and draw conclusions making reference to relevant case law and relevant sections of the tax act as to the tax implications of the above scenario. When referring to cases explain them clearly and in detail explaining how they apply to the given situation.