Daniel is a retired farmer who lives with his partner Viv on a lifestyle block in Levin. After retiring, Daniel decided to take up a new hobby – restoring vintage tractors. He exhibits his restorations at framing and agriculture shows around the North Island and has gained a reputation in farming circles as the go-to man for vintage tractor restorations. Daniel is usually restoring three or four tractors at any given time, and these (along with numerous spare parts and equipment) are stored on his property in Levin. In order to pay for the parts he needs to complete the restorations, he typically sells one or two of the restored tractors each year. He usually makes a 20 – 30 per cent gain on the sale of each tractor.

Viv is not happy with Daniel keeping the tractors and spare parts on their property, so she convinces him to purchase an empty section of land nearby on which to all of the things related to his tractor restoration hobby. A large section was purchased for $100,000 in June 2018. The section is zoned for commercial use. Daniel has a garage/workshop built on the front portion of the section in August 2018 and moves his tractors and spare parts there soon afterwards. In September 2020, Daniel decides that the section is larger than what he needs, so he hires a surveyor to draw up plans to sub-divide the property. In October 2020, he sells the half of the section that he is not using to a land developer. The land developer pays $75,000 for the land.

Required:

a) Explain whether the gain made on the sale of the land is income to Daniel undersections CB 6 – CB 14 of the Income Tax Act 2007, New Zealand.

b) What difference would it make to your answer in part (a) if Daniel’s partner Viv operates a building business?