Income Tax Act 2007 section 765

Exemption: gain attributable to period before intention to develop formed

Section 765 provides an exemption from the land development tax charge for any portion of a gain that relates to the period before the landowner formed the intention to develop the land.

• Where land is sold at a gain and the anti-avoidance provisions for land transactions apply, not all of the gain may be taxable.
• The part of the gain that built up before the owner formed any intention to develop the land can be exempt from the charge.
• The exemption applies to the extent that the gain is "fairly attributable" to that earlier, pre-intention period — meaning a reasonable apportionment must be made.
• This is the first of three related exemptions (sections 765 to 767) that can reduce the amount brought into charge under the land development provisions.