The proceeds from the mere realisation of the capital assets or from the change of investment not give rise to income according to ordinary concepts or talk profit arising from a profit-making undertaking or plan within the meaning of the legislation, even if the realisation that changes carried out in the most advantageous manner. Of course, the capital gains tax provisions may apply in relation to property acquired on or after the 1985.
In the Scottish Australian mining case, a coal mining company exhausted the main coal seam on land that it owned. It then subdivided the land, constructive roads and railway station, granted land to public institutions and then sold the subdivided parcels for profit. It was held that the taxpayer was merely realising capital asset to its best advantage. In the NF Williams case, the High Court commented that an owner of land who holds it until the price of land has risen and then subdivides and sells it is not exchanging in an adventure in the nature of trade or carrying out a profit-making scheme, even if a landowner seeks the advice of experts as to the best method of subdivision and sale or carries out work such as grating, levelling, roadbuilding in the provision of water and power.
More recent examples of the principle that the proceeds from the mere realisation of the S of the assessable as ordinary income are where the profits realised on the sale of subdivided farming land all receipts under agreements for the sale of timber growing on the taxpayers land or the progressive sale of farming property or the profits from the sale of the subdivided orchard are all the exempt from the calculation as assessable income. This reason, the realisation of real property is often not considered an element of assessable income.
