Larrie retired at the age of 55 in December 2009 and received a gratuity of $100,000. He used his gratuity to partly finance the cost of acquisition of a piece of agricultural land costing $300,000. The balance of the acquisition cost was financed through borrowings from a bank. Part of the agricultural land was developed into a macadamia farm and the balance of the land was rented out. During the current tax year, Larrie and his wife migrated to Austria to be with their children. Before he left Australia, he sold the agricultural land for a gain of $200,000. The sale was made through a real estate agent. Costs associated with the disposal included agents commission of $10,000 and legal fees of $1,600. Neither he nor his wife has previously disposed of any real property. Required: (a) Explain whether the gain arising from the sale of land is revenue or capital in nature. You are required to set out your arguments available on both sides of the proposition. Draw a comprehensive conclusion that is supported by relevant case law and rulings. (b) Assuming that the gain arising from the sale of land is capital in nature, calculate Larries net capital gain/(loss) for the current tax year. You need to indicate which element of the cost base is applicable for each outlay. Support your answer with relevant income tax legislation.

Australia tax rate

Q3. Larrie retired at the age of 55 in December 2009 and received a gratuity of $100,000. He used his gratuity to partly finance the cost of acquisition of a piece of agricultural land costing $300,000. The balance of the acquisition cost was financed through borrowings from a bank. Part of the agricultural land was developed into a macadamia faim and the balance of the land was rented out. During the current tax year, Lairie and his wife migrated to Austria to be with their children. Before he left Australia, he sold the agricultural land for a gain of $200,000. The sale was made through a real estate agent. Costs associated with the disposal included agent's commission of $10,000 and legal fees of $1,600. Neither he nor his wife has previously disposed of any real property. Required: (a) Explain whether the gain arising from the sale of land is revenue or capital in nature. You are required to set out your arguments available on both sides of the proposition. Draw a comprehensive conclusion that is supported by relevant case law and rulings. (b) Assuming that the gain arising from the sale of land is capital in nature, calculate Larrie's net capital gain/(loss) for the current tax year. You need to indicate which element of the cost base is applicable for each outlay. Support your answer with relevant income tax legislation. Q3. Larrie retired at the age of 55 in December 2009 and received a gratuity of $100,000. He used his gratuity to partly finance the cost of acquisition of a piece of agricultural land costing $300,000. The balance of the acquisition cost was financed through borrowings from a bank. Part of the agricultural land was developed into a macadamia faim and the balance of the land was rented out. During the current tax year, Lairie and his wife migrated to Austria to be with their children. Before he left Australia, he sold the agricultural land for a gain of $200,000. The sale was made through a real estate agent. Costs associated with the disposal included agent's commission of $10,000 and legal fees of $1,600. Neither he nor his wife has previously disposed of any real property. Required: (a) Explain whether the gain arising from the sale of land is revenue or capital in nature. You are required to set out your arguments available on both sides of the proposition. Draw a comprehensive conclusion that is supported by relevant case law and rulings. (b) Assuming that the gain arising from the sale of land is capital in nature, calculate Larrie's net capital gain/(loss) for the current tax year. You need to indicate which element of the cost base is applicable for each outlay. Support your answer with relevant income tax legislation