CISC8805: Taxation of Land Transactions- Tim Neil & Lacey Neil Case Study- Law Assignment Help

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MAS7788
Law Assignment Help:

Task:

1. Read the case study background information.

2. Write a letter of advice applying the instructions below. Your letter should be targeted at capable, intelligent business people requiring
clear, practical explanations.

3. Provide support for your recommendations and advice with references from reliable publications, the Income Tax Act, and, if appropriate, case law and other sources.

4. You may include diagrams and supporting appendices.

5. Your letter should not give a detailed analysis of the Income Tax Act 2007; however, it should refer to the relevant sections to support your conclusions.

6. You are not required to consider the GST implications of any of the transactions.

7. You are not required to consider the associated person’s statutory provisions.

8. You are to clearly state any assumptions that you make.

9. Additional materials that you may find helpful include:
– New Zealand Taxation 2017: Principles, Cases and Questions, CCH (or the 2014 edition)
– New Zealand Master Tax Guide 2017, CCH
– CCH Electronic Tax Premium Library available via the Unitec online database
– Foundations of New Zealand Taxation Law, CCH

10. Show your word count clearly at the end of your assignment.

Background:
In 1985, Tim Neil and Lacey Neil (“the Neil’s”) purchased around 3.5 hectares of land near Westgate (“the Land”) for dairy and poultry farming. The purchase price was $750,000, which was funded by way of a bank loan of $500,000 and cash deposit of $250,000. In 1986, a house was built at the elevated end of the block and The Neil’s resided in this house. The cost of the construction was $200,000. Subsequent to this purchase and some 12 years later, The Neil’s decided to incorporate two discretionary trusts and transferred the Land to the trusts. They were the settlors and trustees of the
trusts, which was called SN Trust and LN Trust. The beneficiaries of the trusts were the children and grandchildren of The Neil’s.

Prior to the transfer of the Land, the Neil’s engaged TM Valuers Limited to establish the current market value of the Land. The valuers estimated the current market value of the land at $2.5m excluding GST. The valuers report (on page 42) did note that the “land was currently used for horse grazing with a dwelling site”. The Neil’s decided to use this value as the basis for settling the Land into the trust. Contemporaneous to the settlement, the trusts executed an acknowledgement of debt to the Neil’s. Around the same time, the Neil’s prepared a gifting deed relieving the trusts from paying this debt.

Around two years subsequent to settling the land into the trusts, the trustees made an application for resource consent to subdivide the Land into five lots. Resource consent was granted three months after the application. The total cost of the resource consent was $100,000. The Neil’s retained the largest lot which had nice views of the Auckland Harbour. The remaining lots were to be sold to interested purchasers via a confidential tender process. The trustees signed an exclusive listing agreement with Roy White Real Estate to sell the lots.

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Posted on : April 18th, 2018
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