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Axel Ltd is a company incorporated in Australia whose business is building construction, property development and farming in New Zealand. In 2 0 2 1
Axel Ltd is a company incorporated in Australia whose business is building construction, property development and farming in New Zealand. In Axel Ltd entered into a
joint venture agreement with an Australian incorporated
agricultural finance company called Greedy LtdEach joint venture partner agreed to take up $shares in an Australian incorporated farming company called Black Pty Ltd
which owned the farmland in question.
Axel intended to hold its interest in Black Pty Ltd as a long
term investment. Owing to unforeseen circumstances, farming proved to be unprofitable and there was a zoning change in whereby properties in the area could only be disposed of in hectare parcels. Black Pty Ltd borrowed $
million in December to hire lawyers and surveyors to divide up the property. In January Black had sold all the
hectare parcels to a single buyer for a profit of $
million and invested the proceeds to buy more land. Axel Ltd and Greedy Ltd then sold their interests in Black Pty Ltd for
$million in June
Explain the income tax implications of the above transactions for Axel and Black.
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