Income Tax Act 2007 section 766

Exemption: disposals of shares in companies holding land as trading stock

Section 766 provides an exemption from the land transactions anti-avoidance charge where the disposal involves shares in a company that holds land as trading stock.

• This section carves out an exemption from the broader charge on gains from land-related transactions.
• The exemption applies specifically to disposals of shares in companies where the underlying land is held as trading stock rather than as an investment or capital asset.
• The rationale is that where land is already treated as trading stock, the profits from its disposal would be taxed as trading income in the normal way, so the anti-avoidance provisions are not needed.
• This exemption helps to prevent double taxation by ensuring that genuine trading transactions involving land held as stock are not caught by the anti-avoidance rules as well as by the normal trading income rules.